Naira Climbs as Nigeria’s Foreign Reserves Cross $49bn
The naira climbed against the US dollar to 1,373 at the Nigerian Foreign Exchange Market (NFEM) at the close of the trading session on Friday.
The local currency the naira, rallied following a surge in FX liquidity at the official window, with interbank foreign exchange transactions increasing to $78.838 million across 110 deals from $73.598 million.
The spot FX rate hovered between N1,372 and N1,375 per dollar during the intraday trading session, in the absence of significant US dollar outflows from the Nigerian FX market yesterday.
The local currency strengthened as growing external reserves boosted investor sentiment, with significant demand for dollars from foreign portfolio investors who participated in the OMO bills auction on Friday.
The latest reading showed that Nigeria’s foreign reserves rose by 0.57% to $49.26 billion. In the oil market, Brent crude front-month futures traded largely flat at $93.84 per barrel early on Friday, while U.S. benchmark West Texas Intermediate (WTI) slipped 0.12% to $88.94 per barrel.
At the time of writing, Brent crude had declined further by 1.74% to $92.08, while WTI fell 1.52% to $87.55. The recent decline in oil prices in May follows April’s historic monthly surge, driven by severe supply disruptions that pushed average U.S. gasoline prices well above $4 per gallon.
Investment analysts at Cowry Asset Limited expect the naira to remain mixed in the near term, supported by rising external reserves but still pressured by FX demand and liquidity constraints.
“The official market may stay relatively stable, while the parallel market could remain volatile due to uneven dollar supply.
“Oil prices are likely to stay volatile following recent declines after April’s sharp rally, as markets adjust to shifting supply-demand conditions, profit-taking, and evolving global growth and geopolitical risks”, the firm said in a note. Central Bank Floats N600bn OMO Bills, Raises N1.9trn
