Naira Falls on Growing FX Outflow Despite Intervention
The naira declined against the US dollar at the official window on Thursday, marking the seventh consecutive session of depreciation in the local currency.
The Naira weakened against the dollar at the Nigerian Foreign Exchange Market (NFEM), depreciating by ₦3.70 per dollar to close at ₦1,359.81 compared with ₦1,356.11 previously recorded, data published by the Central Bank showed.
Based on data from the CBN, the naira traded within the low and high bands of ₦1,356.50/US$ and ₦1,362.90/US$, respectively. This downward trend in the exchange rate is attributed to a surge in foreign payments that have outpaced the available dollars in the market.
In a move to address the ongoing dollar shortfall at the official window, the Central Bank intervened by selling $100 million to banks and dealers on Tuesday.
However, the fx support failed to reverse the naira trend, but analysts see no cause for alarm, given that the authority recently mopped up foreign currency to achieve balance.
However, market analysts are optimistic, suggesting that the naira would remain stable, bolstered by an improving external reserves position that instils confidence in both investors and policymakers.
Foreign reserves were last reported at US$49.39 billion, up US$120.05 million due to sustained accretion from sources such as oil receipts and remittances, underscoring ongoing stability and transparency.
This substantial build-up in external reserves is expected to remain resilient, as sustained oil prices and remittances continue to enhance inflows. The buffer reinforces confidence among investors and policymakers alike, paving the way for a more stable outlook for the exchange rate. UBA Climbs to N2.1trn as Investors Bet on Earnings Outlook
