Naira Declines over Squeezed US Dollar Volume in FX Market
Traded at N1450 per dollar, the naira depreciated against the US dollar on Friday at the official foreign exchange market due to a sustained struggle to boost FX supply. Persistent increase in US dollar upstreaming abroad has continued to drain FX liquidity.
The pressure on the local currency started in November in spite of FX interventions of about $400 million. At the official window, the naira declined by 0.18% to N1,450.43 per dollar as pressure mounted, reflecting higher foreign payments and lower FX inflows.
Due to increasing pressure, the naira touched an intraday high of N1456 as against N1450 the previous trading session. The Nigerian foreign exchange market saw spot rate hit an intraday low of N1448.29 versus N1446 quoted the previous trading session.
In the parallel market, the naira depreciated by 0.20% to N1,463/$ following increased demand for the dollar amid ongoing year-end activities.
The exchange rates directions reflect softer currency sentiment and renewed pressure across both the regulated official segment and the informal foreign exchange market.
Despite FX interventions, the naira has failed to rebound to the best rate of N421 per dollar reached in November. The official CBN rate declined by 1.76% from 1,421.73/$ to close at 1,446.74 per dollar last month.
Exchange rate volatility peaked mid-month, fuelled by high dollar demand, following from U.S. President Plan to take military action against Nigeria regarding the Christian genocides and the redesignation of Nigeria as a “Country of Particular Concern” by President Trump, which triggered selloffs and capital outflows. British Pound Strengthens on Revised UK PMI, Softer USD
