Naira Closed N15 Weaker, CBN Sells US Dollar to Banks
The Nigerian naira closed this week N15 weaker against the US dollar as foreign portfolio investors (FPIs) reacted negatively to US President Donald Trump’s invasion threat over Christian genocide in the country.
Demand for the US dollar increased above previous average as offshore investors exited their positions in the financial market after Trump’s planned military action.
Still, the FX market traded largely stable, supported by a relatively liquid currency market, exporters, non-bank corporate inflows and softened support from the Apex Bank intervention.
The naira saw a huge loss early in the week, driven by early strong demand amidst cautious FPIs activities regarding POTUS comments on Nigeria.
Later, there was offshore investors’ participation in OMO instruments and increased demand for the local currency due to conversion of dollars to naira, helping to moderate FX rate depreciation.
The exchange rate weakened from ₦1,421.73/$ at the close of previous week to ₦1,436.58/$ by Friday at the official window week on week.
Analysts said the CBN intervention also kept market activity balanced. The Apex Bank sold $50 million to banks to strengthen supply in the currency market and stem negative tide against the naira.
This week, external reserves rose by about $43.2 million to $43.3 billion, reinforcing market stability and the naira’s steady performance.
The naira is expected to remain stable in the near term, supported by ongoing CBN policy measures, AIICO Capital Limited said in a note. Analysts said the successful subscription of the $2.35 billion Eurobond is likely to boost external reserves and reinforce the naira’s strength.
Oil prices prices recovered from a early week dip on Friday on hopes Hungary can use Russian crude oil as U.S. President Donald Trump met Hungary’s Prime Minister Viktor Orban at the White House.
Despite the late recovery, crude oil prices dipped w/w as Brent crude shed by $1.14 (-1.76%) to $63.63 per barrel, while U.S. WTI lost $1.23 (-2.02%) to close at $59.75.
Similarly, gold prices dipped w/w but recovered on Friday as the dollar softened and uncertainty around the U.S. government shutdown bolstered safe-haven demand, while Wall Street indexes were set for sharp weekly declines.
However, spot gold fell 2.56% to $3,999.72 per ounce, while U.S. gold futures decreased 1.79% week on week to settle at $4,009.80.
Commodities prices are expected to see mixed movements next week, with gold supported by a weaker dollar and safe-haven demand, while oil may remain under pressure due to supply concerns despite potential support from production tensions. GTCO Falls, Investors Exit Position after Earnings Disappoint
