Naira Depreciates Across FX Markets on Liquidity Squeeze
The naira weakened against the US dollar in the foreign exchange market after Nigeria’s monetary authority cut its benchmark interest rate.
Data released by the Central Bank revealed that the local unit closed at N1,328.50 at the Nigerian foreign exchange market (NFEM), up 0.05% from the previous day’s close.
In the parallel market, the local currency depreciated against the US dollar by 0.51% to N1,387, suggesting an FX liquidity shortfall amid rising demand.
The foreign exchange markets closed with a widening exchange rate gap, with the FX spread climbing to N59 from N52 the previous day.
The naira, however, gained against the pound, settling at N1,762.92 and against the euro at N1,514.89 at the official window, the CBN revealed in its daily FX report.
Nigeria’s gross external reserves increased further, settling at $54.808 billion as FX continues to be absorbed by the economy amid rising global oil prices.
Brent’s rebound above $100 and the Federal Reserve now raising rates kept US yields high, weighing on emerging-market debt.
Hopes for US-Iran talks after their meeting at the UN cut demand for safe havens, and gold fell 0.84% to $4,327.15 an ounce. It is now down 0.69% for the year.
Uncertainty over the reopening of the Strait of Hormuz lifted Brent 2.16% to $102.54 a barrel, taking its year-to-date gain to 68.51%.
Saudi plans to restart exports through its East-West pipeline and progress in US-Iran talks capped the rise. South Africa 10-Year Bond Yield Edges Higher to 8.83%
