Naira Gains N13 as Offshore Inflows Boost Optimism in FX Market
The naira rose sharply against the US dollar at the Nigerian foreign exchange market over sustained investor confidence and market optimism following the latest round of offshore FX inflows.
Foreign portfolio investors participated strongly in the rounds of open market operations conducted last week, where the Apex Bank issued N600 billion in OMO bills twice. The authority sells OMO bills to offshore investors at relatively higher yields to boost dollar supply.
According to spot data obtained from the Central Bank of Nigeria (CBN) FX platform, the naira appreciated N13 from N1553.11 last week to N1540.04 at the first trading session in the new week.
The local currency has continued to reclaim value against the dominant US dollar in the foreign exchange market, supported by improved investor sentiment and a slowdown in corporate demand.
Last week, the naira ended the holiday-shortened week with its highest appreciation since December 2024, gaining 2.13% week on week against the US dollar to close at N1,553.12/US$1.
The parallel market shared the same sentiment, appreciating by 2.13% week on week to close at N1,585.00/US$1, according to the research arm of Coronation Merchant Bank Limited. Analysts said forex market optimism was buoyed largely by inflows from portfolio investors during the week, which reflected on forward contracts across tenors.
The 1-month forward rate closed at N1,606.00/US$1. The 3-month forward contract rate closed at N1,675.50/US$1. The 6-month forward contract closed at N1,776.30/US$1. The 1-year forward rate closed at N1,977.47/US$1.
The NAFEM window recorded an inflow of US$780 million compared to US$1.04 billion in the previous week, Coronation said in its investors note on Tuesday. The firm reported that exporters accounted for 18.83% of the total inflows. The CBN contributed 19.78%, while foreign portfolio investors (FPIs) accounted for 32.47%.
Further details revealed that non-bank corporates accounted for 27.60%, while other sources accounted for 1.32% of the inflows in the market. External reserves remained tightened around $38.33 billion amidst uncertainties in the global commodity market.
Oil prices rose last week, driven by a combination of supportive macroeconomic and supply-side factors. Renewed optimism over US-China relations, following a resumption of trade negotiations, lifted market confidence in the global economic outlook and future oil demand.
A weaker U.S. dollar further supported prices by making crude more affordable for international buyers. On the supply side, OPEC+ signaled a more cautious approach to production increases, reinforcing expectations of tighter supply in the near term. #Naira Gains N13 as Offshore Inflows Boost Optimism in FX Market #Mozambique Cuts Interest Rate by 75 bps, Sees Steady Inflation
