Naira Falls Against US Dollar, Exchange Rates Gap Collapses
The Nigerian naira paused its progress in the official market and lost value relative to the US dollar due to a slight rise in foreign exchange requests from businesses and other market participants.
In the black market, the value of the local currency increased compared to the US dollar, resulting in a significant decrease in the disparity between official and black market exchange rates on that day.
FX inflows from foreign investors that participated in the OMO auction helped boost liquidity in the currency market. The CBN made no interventions during the week in the absence of significant pressure. Data released by the Central Bank of Nigeria (CBN) indicated that the exchange rate dropped to N1528.56 per dollar, down from N1525.82 the day before.
Transactions in the forex market were consummated between an intraday low of N1526 and an intraday high of N1530, with the average FX deal settling at N1528.49 per greenback.
Meanwhile, the parallel market appreciated by 131 bps to print at N1,530 per dollar, reducing the exchange rate gap to about N3 at the close of the trading session on Friday.
Analysts maintained that the naira is likely to remain stable in the near term, supported by improving FX liquidity from domestic and foreign sources, alongside subdued demand pressures. Meanwhile, gross FX reserves declined for the seventh consecutive week, decreasing by USD138.30 million week on week to USD37.18 billion
Elsewhere, gold edged up to around $3,330 per ounce on Friday, heading for a weekly advance as concerns over the US fiscal deficit and lingering tariff uncertainty boosted the metal’s safe-haven appeal.
On Thursday, the House approved President Donald Trump’s massive package of tax and spending cuts, which is expected to add more than $3 trillion to the country’s deficit over the next decade.
Meanwhile, Trump said he would begin sending letters to countries on Friday specifying what tariff rates they will face on imports to the US—a clear shift from earlier pledges to negotiate individual deals.
However, gold’s upside was capped by strong US labour market data, which showed that firms added a more-than-expected 147,000 jobs in June and the jobless rate unexpectedly dropped to 4.1%, strengthening the case for the Federal Reserve to hold interest rates steady.
For the week, the precious metal is on track to post a gain of over 1%, ending two consecutive weeks of losses. #Naira Falls Against US Dollar, Exchange Rates Gap Collapses Nigerian Treasury Bills Yield Falls Below 20%, OMO Rate Dips
