Naira Gains N15, Interbank FX Deals Increase Sharply
The naira appreciated against the US dollar on Wednesday, trading at N1371 as the Central Bank’s daily FX publication showed a sharp increase in interbank FX deals.
The official spot rates hovered between N1,363.5000 and N1,388 per dollar, reflecting improved FX liquidity that has continued to keep exchange rate movements in check.
Without disclosing interbank turnover for the midweek activities at the Nigerian Foreign Exchange Market (NFEM), the Central Bank revealed interbank deals rose to 220 from 71 reported the previous day.
This suggests the official FX market experienced a liquidity surge that pulled down walls around the dominant US dollar on Wednesday.
The local currency has been in strong demand from foreign portfolio investors seeking to purchase OMO bills and other fixed-income instruments.
In the parallel market, the naira appreciated to N1380 per dollar, reflecting weekly FX sales support for eligible Bureau de Change operators, competing with local banks’ naira debit spending for business and personal travelling allowance.
Global oil prices have fallen sharply, and stock markets have soared after the US and Iran agreed to a conditional two-week ceasefire that includes reopening the key Strait of Hormuz waterway.
The price of benchmark Brent initially tumbled by more than 15% to below $92 a barrel, while US-traded oil fell by a similar amount to just under $94.
But oil prices still remain higher than before the conflict started on 28 February. At the time, it was trading at around $70 a barrel.
The cost of energy has jumped as oil and gas supplies from the Middle East have been severely disrupted after Iran threatened to attack ships trying to use the Strait in retaliation for US and Israeli airstrikes.
Before the temporary ceasefire in the Gulf, the world was experiencing the largest oil price shock ever, surpassing even the 1970s crisis. The scale and speed of movements were comparable to some of the most disruptive episodes in modern energy markets. FTSE Russell Keeps Egypt on Watch List for Demotion to FM Status
