Naira Depreciates, Touches N1392 on FX Liquidity Shortfall
The Nigerian naira depreciated against the US dollar at the foreign exchange market on Wednesday as FX liquidity shortage persisted, traders said.
The local currency touched an intraday high of N1392 at the official FX window on Wednesday, reflecting tight US dollar liquidity amid growing international payments.
The naira closed at N1380.0775 per US dollar at Nigeria’s foreign exchange market (NFEM), the Central Bank said in its daily FX update, from N1370.6373 the previous day,
Transactions were conducted between N1368 and N1392 at the official window during the day, as rising FX payments pressured the hard currency supply.
According to the Central Bank report, NFEM interbank FX turnover was relatively steady at $125.588 million across 126 deals, from $125.314 million the previous day.
Interbank FX activity among financial institutions has fluctuated amid a sharp slowdown in forex market interventions by the CBN, with more than six weeks of no support for the local units.
A strong US dollar has generally put significant pressure on emerging-market currencies, amid the Federal Reserve’s hawkish tone. A number of oil-linked African currencies pull back against crosses, according to forex market data reviewed.
Meanwhile, Nigeria’s foreign reserves increased further to $51.142 billion, according to updated data from the Apex Bank, up from $51.060 billion the previous day.
Global oil prices on Wednesday fell to their lowest level since before the outbreak of the Iran war.
Oil prices fell about 4% Wednesday as tankers continued to transit the Strait of Hormuz, raising hopes that the worst of the Middle East supply disruption is over.
West Texas Intermediate futures closed at $70.34 per barrel after hitting a session low of $69.63 per barrel. It was the first time the contract fell below $70 since March 2.
Brent crude futures, the international benchmark, fell 4.3% to settle at $73.74 per barrel, notching its lowest level since before the U.S. and Israel launched the war against Iran on Feb. 28.
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