Naira Drops at Official Window to N1,436 as FX Inflow Dips
Down by N15 per dollar, the naira dropped sharply at the official window after a report that total inflows into the currency market reduced by 24%.
The Nigerian foreign exchange market (NFEM) experienced hot red pressures due to heightened demand for US dollar on Monday. The huge demand surfaced after the Naira gained value against the greenback with a sharp weekly gain last week.
Sustained accretion into external reserves and foreign investors’ positive sentiment have been key drivers of strong FX liquidity, with the Apex Bank’s intermittent intervention sales to authorised dealers.
Updated FX data from the Central Bank of Nigeria (CBN) showed that the local currency depreciated by 1.02% to close at ₦1,436.34/$ from ₦1,421 last week. The CBN update showed that the spot rate hit an intraday high of N1440 per dollar as FX liquidity in the currency market reduced.
Foreign exchange (FX) inflows into the Nigerian currency market fell by 24% to $1.01 billion last week in the absence of significant open market operations action by the Central Bank.
Elevated OMO bills yields have been a key attraction that has driven foreign portfolio investors into the Nigerian market with a bucket of hot money.
Still, the forex market appeared liquid enough to weather the storm against sustained demand for US dollar. According to an update released by Coronation Merchant Bank’s research subsidiary, total foreign exchange inflows through the Nigerian Foreign Exchange Market (NFEM) slowed.
Aggregate FX supply printed at US$1.04 billion last week, down from US$1.37 billion. The bank said foreign portfolio investors (FPIs) accounted for 62.3%, or US$645.40 million, of total inflows.
This was followed by contributions from exporters (15.0%), non-bank corporates (11.6%), the FDIs (1.9%), and other sources (9.2%).
Naira is forecasted to close 2025 at N1400, reflecting an ongoing energy and financial sector reforms, and increased FX market transparency following recent adjustments GCR Downgrades Dangote Industries Ratings, Outlook Evolving
