Naira Falls as FX Demand Spikes, External Reserves Near $42bn
The Nigerian naira experienced increased pressures from the official market due to heightened demand for foreign currency, US dollar in particular.
The US dollar volume declined at the Nigerian foreign exchange market, highlighting reduced ability to meet rising demand as the strength of previous inflows eased.
FX analysts said the official spot rate was roughened as FX log revealed dollar demand surged after more than $38 million FX intervention last week.
Intraday FX spot rate weakened to N1510 on Thursday, while exchange rate traded at lowest point of N1487, data released by the Central Bank of Nigeria (CBN) revealed.
FX traders said the local currency came under pressures in the absence of FX intervention, and lower inflows from offshore investors amidst growing dollar demand.
Naira outlook remains bullish despite the pull back at the official window. The CBN is anticipated to sell dollar when needed to boost FX inflows, and the market anticipates inflows from offshore investors planning to take positions at the next OMO auction to act as additional pressure absorbers.
Similarly, the naira also depreciated at the parallel market to close at an average of ₦1,520 The CBN is expected to influence the exchange rate direction should the rate hit the red line, Broadstreet analysts told MarketForces Africa, adding that the pressure is usually intermittent.
Today, the nation’s gross external reserves inched higher near $42 billion amidst uncertainties in the global commodity market. The CBN reported that gross external reserves climbed to $41.954 billion on Wednesday, up from $41.899 billion the previous day.
#Naira Falls as FX Demand Spikes, External Reserves Near $42bn OMO Bills Inflow Fuels Banking System Liquidity, Rates Steady
