Naira Drops as Data Confirms FX Inflows Declines for Weeks
The naira dropped against the US dollar at the Nigerian Foreign Exchange Market (NFEM) as data showed foreign currencies were in short supply last week.
The declining FX supply forced the authority to conduct FX interventions twice last week. Liquidity has not improved, reflecting in slight depreciation of the local currency at the official window.
According to FX data update from the Central Bank of Nigeria (CBN), the spot rate fell to N1535.92 per greenback, a mild depreciation from the opening rate of N1533.56.
FX market update revealed that the CBN sold a total sum of $150 million last week to authorised dealer banks due to reduced dollar liquidity in the official market.
The aggregate FX inflows moderated for the third consecutive week, settling at US$732.8 million, Coronation Merchant Bank Research unit said in an update, a 7.4% decline from US$791.1 million recorded the prior week.
Non-bank corporates emerged as the largest contributor to inflows, with US$295.0 million, surpassing Foreign Portfolio Investors (FPIs), at US$267.9 million, Coronation Research said in its FX update released on Monday.
Inflows from exporters accounted for 19.45%, while individual inflows were minimal at 0.45%. Other international sources accounted for 3.19% of the total inflows.
Nigeria’s gross external reserves continued its upward trajectory, rising by US$800.51 million week on week to close at US$40.16 billion on Friday. Notably, this is the first time since January that reserves have crossed the US$40 billion threshold.
This buildup likely reflects sustained FPI inflows and a recent surge in non-bank corporates. Analysts said they anticipate relative stability in the FX market this week, underpinned by a stronger reserves position, sustained FPI activity, and renewed momentum in non-bank corporate inflows.
Barring unforeseen external shocks, the naira is expected to trade within the N1,500/US$1–N1,600/US$1 range, consistent with the CBN’s policy guidance. #Naira Drops as Data Confirms FX Inflows Declines for Weeks#
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