Naira Falls as Demand for US Dollar Exceeds FX Liquidity
The Nigerian naira fell against the US dollar in the foreign exchange (FX) market as demand pressure began to take shape. Spot FX data from the FMDQ platform revealed that the naira depreciated by 0.13%, closing at N1,536.58 Aper US dollar in the official market.
Trades were consummated within the range of N1,500 and N1,550 per US dollar, suggesting there was significant FX demand pressure in the official window. FX demand pressure associated with early-year foreign transaction payments has begun to take shape, analysts said in a chat with MarketForces Africa.
The market anticipates the Central Bank of Nigeria (CBN) will continue to boost liquidity in the currency market to ensure exchange rate stability. The exchange rate ended the day at N1,640 per US dollar as Bureau de Change operators enjoyed a temporary lifeline to buy $25,000 from banks at the official rate.
In January, the central bank also recorded additional inflows, which boosted the gross external reserves slightly to $40.884 billion. With an increase in oil production and two refineries resuming operation, analysts said FX receipts from oil sales could boost the nation’s external reserves balance strongly in the first quarter of 2025.
In the global commodities market on Tuesday, oil prices stabilised at their highest levels since mid-October, driven by colder weather boosting demand, along with rising expectations for stricter sanctions on oil exports from Iran and Russia.
Brent crude was priced at $77.41 per barrel, while WTI stands at about $74.91. In contrast, gold prices declined as U.S. Treasury yields increased and the Federal Reserve’s recent indication of a slower rate of cuts in 2025.
This has kept investors eagerly awaiting upcoming economic data this week to provide further clarity on that perspective. It was trading at approximately $2,632.47 per ounce. #Naira Falls as Demand for US Dollar Exceeds FX Liquidity
