Naira Falls to N1,512 Despite Growing Foreign Reserves
The naira has maintained steady decline for two weeks while the nation’s external reserves continue to climb. Exchange rates at informal currency market and official rates plunged into deadly spiral after the apex bank’s FX intervention sales.
Having depreciated by more than 40% year to date, the naira extended losses against the US dollar as FX liquidity challenge persists. According to FMDQ FX spot rate data, the naira depreciated by 21bps or 0.21% to N1,512.61 in the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Meanwhile, data from the Central Bank of Nigeria (CBN) showed that foreign reserves climbed further to $34.432 billion on Tuesday.
The CBN has said the authority will not defend the naira in the official window since it floated the local currency, in a nation that depends on imports to survive. The apex bank has limit FX liquidity levels in the official window, causing the exchange rate to run amok.
The foreign exchange market saw pressure on the naira from speculative activities and rising demand, causing the naira to weaken against the US dollar across market segments. In the parallel market, the naira depreciated by 0.60%, ending the day at an average of N1,514 per US dollar, according to channel check.
In the global commodity market, oil prices steadied on Wednesday after trading higher due to a bigger-than-expected drawdown in U.S. crude stockpiles, while economic headwinds from China and the eurozone capped gains.
Brent crude futures edged up 0.38% to $86.57 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 0.32% to $83.08, with both benchmarks hitting their highest levels since April. #Naira Falls to N1,512 Despite Growing Foreign Reserves Money Market Rates Climb on Liquidity Pressure
