Naira Exchange Rates Inch Near Unification with CBN Touch
The naira value of a unit of US dollar rose to N1501 in the official foreign exchange market, thanks to continuous support from the Central Bank. The gain posted in FX market driven by increased foreign exchange supply from foreign portfolio investors (FPIs), international oil companies (IOCs), and the Central Bank of Nigeria’s (CBN) market interventions, AIICO Capital Limited said in a note.
This boost in dollar liquidity helped ease FX demand pressure. Trading activity was robust, with transactions occurring within the $/₦1,490.00 to $/₦1,520.00 range.
The CBN’s foreign exchange sales to banks, which totalled $181.25 million during the week strengthened the total volume of US dollars in supply side, helping the naira to survive persistent demand for foreign currency.
According to FX data obtained, the naira appreciated by 0.6% to N1,501.08 per greenback at the Nigerian Foreign Exchange Market (NFEM) on Friday as the CBN intervened, selling USD66.80 million to authorised dealers.
Due to successive but less aggressive FX auction sales to authorised dealer banks, the external reserves continue to decline week on week, according to data from the CBN.
The gross external reserves level declined by USD300.11 million to USD38.74 billion at the last look on Friday, marking the 6th consecutive week of decline. In the forwards market, the naira rates increased across contracts, according to Cordros Capital Limited.
FX forward contract for 1-month appreciated by 0.8% to N1,541.90 per dollar, and the 3-month contract rose by +1.2% to N1,614.50. Also, the 6-month FX forward contract climbed by +2.0% to N1,715.15 and 1-year rose by +2.2% to N1,906.24.
In line with the CBN’s efforts to sustain carry trade opportunities and boost capital inflows, coupled with its ongoing market interventions, analysts said they expect FX liquidity to remain adequate, supporting naira stability in the short term.
The FMDQ FX rate depreciated by 0.47% to N1,501.08/USD, while the parallel market rate remained flat at N1,510.00 US dollar, Investment banking firm CardinalStone Limited said.
This has reduced the exchange rate gap to N9, reducing opportunities for speculative trading in the forex market. Oil prices dropped by 2% but remained flat for the week, as concerns over Russian supply disruptions provided support amid ongoing uncertainty surrounding a potential Ukraine peace deal.
Brent crude declined by $1.80 (2.35%) to $74.68 per barrel, while WTI fell $1.81 (2.5%) to $70.67. Data from the CBN signalled an uptick in demand for Bonny Light crude, pushing prices higher by 1.56% week-on-week to $78.24 per barrel on Friday, compared to $77.04 per barrel in the previous week.
Meanwhile, gold prices dipped slightly as investors took profits from the previous session’s record high. However, bullion was on track for an eighth consecutive weekly gain, fueled by safe-haven demand amid concerns over U.S. tariffs. Spot gold edged down 0.1% to $2,939.63 an ounce after hitting a record $2,954.69 earlier in the week. #Naira Exchange Rates Inch Near Unification with CBN Touch FG to Create Diaspora City to Boost Tourism
