Naira Depreciates by N7.52K as Forex Market Liquidity Drops
The naira depreciated by N7.52 kobo per US dollar in the foreign exchange (forex) market, driven by a sharp decline in FX liquidity and sustained demand for international payments.
With heavy reliance on imports, FX payments continue to rise amid scarce inflows. Both exporters and foreign portfolio investors, including non-bank corporates, are actively driving the supply side with occasional support from the Central Bank.
According to data released by the Central Bank on Tuesday, the official exchange rate depreciated against the US dollar to N1375.7463 from N1368.2664 the previous day.
Details indicated that FX transactions consummated at the Nigerian foreign exchange market (NFEM) window on Tuesday were quoted between N1369 and N1380, versus N1366 and N1371.9000 the previous day.
This suggests a liquidity shortfall was experienced in the official market amid a sustained absence of FX interventions by the monetary authority for weeks.
FX trading activity between financial institutions and market makers declined further on Tuesday, according to data released by the Apex Bank.
Interbank FX turnover at the NFEM window reduced by about 23% to $41.736 million from $54.180 million reported on Monday. Similarly, the number of deals in the interbank market fell to 47, signalling weaker trading activity, down from 70 the previous day.
Today, Nigeria’s foreign reserves surged to $51.5 billion on sustained inflows from hydrocarbon sales, remittances, and other sources, according to Central Bank data.
Oil prices rose Tuesday as traders weighed the risk of renewed disruption near the Strait of Hormuz against signs that some Gulf shipping traffic is recovering.
The market remained sensitive to any setback in U.S.-Iran talks after recent attacks on vessels near one of the world’s most important energy routes.
Oil futures climbed Tuesday afternoon in extended trading after the U.S. Treasury Department said it was revoking, effective immediately, the license it had granted on June 21 to allow the sale of Iranian oil.
Brent crude futures rose 0.89% to $72.63, while U.S. West Texas Intermediate crude futures climbed 0.80% to $69.10. Oil prices increased after attacks on ships in and around the Strait of Hormuz highlighted the continuing danger for vessels in the critical waterway MTN Nigeria Loses N1.7trn as Investors Exit Positions
