Naira Depreciates for 10-Day Straight, FX Gap Narrows
The Nigerian naira weakened against the US dollar for 10 consecutive days as foreign payments pressures continue to outpace FX liquidity.
Daily FX data published by the Central Bank of Nigeria (CBN) showed that the local currency weakened against the greenback again, depreciating by ₦6.27/US$ to close at ₦1,384.29/US$ from ₦1,378.02/US$ previously.
Based on data from the CBN, Fx largely traded within the low and high bands of ₦1,370.00/US$ and ₦1,450.00/US$, respectively, on Tuesday.
The local currency has been under pressure even with the $200 million FX sales intervention last week. The exchange rate was steadily declining, reflecting tight FX liquidity, but analysts said there was no cause for alarm given the strong external reserves position.
In the parallel market, the exchange rate was little changed at N1385 per dollar, as $150,000 in FX sales to the Bureau de change kept the informal FX segment liquid.
Hence, the FX spread narrowed sharply to 0.05% from 0.51% amidst growth in foreign reserves and expectation of an increase in US dollar inflows.
Foreign reserves edged higher to US$49.69 billion, according to the latest data published by the CBN, appreciating by US$89.14 million. The build-up in external reserves is likely to remain resilient as supportive external conditions persist, according to Broadstreet analysts.
Stronger oil‑related inflows continue to provide a solid base, helped by stable production levels and firmer global prices, Anchoria Securities said in its market update. Nigeria’s Private Sector Activity Deteriorated in January -Stanbic IBTC
