Naira Gains Traction on Improved FX Liquidity, Closing at N1,346/$
The Nigerian naira rose against the crosses in the official market on Tuesday, reflecting improved FX conditions supported by intervention and inflows from foreign portfolio investors.
The local unit rose seven basis points against the US dollar, with data showing a sharp increase in interbank forex market activity—both turnover and deal count spiked.
According to data obtained from the Central Bank of Nigeria (CBN), the official rate strengthened to N1,346.9348 per US dollar, from the previous quote of N1,347.9435.
FX trade data showed transactions between N1,334 and N1,349.5000 during the intraday session, signalling higher US dollar volume in the market. Demand pressure eased amid fresh inflows from foreign portfolio investors, non-bank corporates, and other sources.
Recent market cycles saw elevated demand pressure as Foreign Portfolio Investors (FPIs) exited local equity and adjusted fixed-income bets, causing short-term dollar liquidity shortfalls.
The market saw a surge in service-related requests and higher inventory imports ahead of the festive season, typically intensifying dollar demand.
The Apex Bank pumped $950 million to cushion the effects of a spike in forex demand. Rather than aggressively setting the price, the CBN’s modern intervention strategy buffers the market.
FX analysts said that by supplying liquidity (such as recent tactical direct sales to banks), the apex bank absorbs sudden demand spikes to keep the Naira stable and range-bound.
At the Nigerian foreign exchange market, interbank FX turnover spiked 447% to $118.957 million, up from $21.765 million the previous day. The number of deals in the interbank window increased to 117 from 23.
Nigeria’s foreign reserves remain elevated, though outflows have increased recently. The decline followed the latest FX intervention at the official window amidst elevated global oil prices.
Oil futures settled lower Tuesday in a choppy session, with concerns about U.S. strikes on Iranian targets cushioned by continued diplomatic efforts to bring the U.S. and Iran to a conflict settlement.
Brent crude for January delivery settled down 1.1% at $103.60 a barrel. West Texas Intermediate for December delivery slipped 0.4% to $96.09 a barrel. Money Market Rates Broadly Stable as Excess Liquidity Tops N7trn
