Naira Depreciates as Offshore Investors Upstream FX
The naira dribbled backward against the US dollar in the foreign exchange market as FX demand surged. Exchange rate volatility has been negative since last week when the Central Bank of Nigeria (CBN) embarked on intervention holidays.
With fast-rising demand for the US dollar, the naira came under pressure, closing in red three times in the week. In its note, investment firm AIICO Capital Limited revealed the local currency faced pressures due to increased demand from certain offshore investors.
An undisclosed amount of US dollars was demanded for upstream abroad. Analysts said foreign investors demand is usually relating to multinational companies seeking to repatriate US dollar dividends—matured OMO bill repayment brought into the economy last year.
Also, some foreign inflows were received into the financial markets as the CBN sold OMO bills to banks and foreign portfolio investors on Thursday. In the official FX market, trading fluctuated between $₦1,505.00 and $₦1,520.00, AIICO Capital Limited told investors.
Spot FX data from the FMDQ platform showed that the naira depreciated by 0.77%, closing at $1,512.30 per greenback. Nigeria’s FX reserves stabilised at $38.416 billion as the CBN paused its intervention sales, but the move has caused naira to decline across the market.
Parallel market rate closed at N1520 per US dollar as FX shortage surfaced amidst uncertainties in the global commodities market.
Today, oil prices closed with little change after a volatile session. Brent crude closed below $70 per barrel, weighed down by ongoing tariff tensions involving the U.S., Canada, and China, along with OPEC+ plans to boost production.
Brent futures edged up 16 cents (0.2%) to $69.46 a barrel, while U.S. WTI crude rose 5 cents (0.1%) to $66.36. Meanwhile, gold prices slipped as rising U.S. Treasury yields prompted profit-taking.
Investors focused on Friday’s payroll data for potential clues on the Federal Reserve’s next policy move. Spot gold dipped 0.1% to $2,915.83 an ounce, while U.S. gold futures remained steady at $2,926.60.
Analysts expect crude oil to remain volatile due to OPEC’s plans to increase production next month, growing optimism around a Russia-Ukraine peace deal, and ongoing tariff uncertainties. #Naira Depreciates as Offshore Investors Upstream FX Nigerian Exchange Shrinks as Equities Investors Lose N166bn
