Naira Hits N1675 as CBN Abandons Dutch FX Auction
The naira exchange rate has crossed to the other side, trading at N1675 per US dollar in the official FX market as the liquidity crisis deepened. Spot data from the FMDQ platform revealed that the naira depreciated by 2.72%, closing at ₦1,675.49 per US dollar at the official market.
“The Central Bank of Nigeria (CBN) is more likely to come to the FX market to sell US dollars to authorised banks on Friday to avoid exchange rate slipping to N1700…which is quite possible in a single day trading without FX intervention,” analysts said in a chat with MarketForces Africa.
The exchange rate continues to wobble while accumulations into external reserves persist at the Nigeria is seeking $750 million disbursement from the World Bank, which is part of broader $2.25 billion loan obtained by government.
The imbalance between US dollar demand and supply has caused the exchange rate to remain under pressure for most of the month. The authority has continued to dispel the fact that the country’s depressed exchange rate has brought the misery index to the worst level ever seen in Africa’s largest populated economy.
Already, some fintech platforms have started quoting spot rate for invisible FX transactions at about N1,800 to US dollar, according to channel check by MarketForces Africa.
Most of the local banks have barred US dollar spending on debit cards, creating multiple FX quotes amidst the Central Bank of Nigeria’s pursuit of exchange rates convergence. The latest pattern, which is also similar to market experience under erstwhile CBN Governor, Godwin Emefiele, has shown that convergence may be a tall ambition after all.
The CBN has been selling forex to authorised dealer banks to saturated FX liquidity in the official market. However, the Apex Bank appeared to have abandoned the newly re-introduced retail Dutch auction system again.
Since its first attempt in August, 2024 the Apex Bank has not made another attempt to conduct retail Dutch Auction FX sales. Analysts noted that the CBN sales have had little impacts on exchange rates in the currency markets.
According to channel check conducted by MarketForces Africa, the naira closed at ₦1,726 to the US dollar in the parallel market on Thursday, from N1,730 per greenback earlier in the morning. The gap between the official and parallel market rates collapsed to N51 on Thursday due to negative spot rate movement in the Nigerian autonomous FX market.
Nigeria is considering a diaspora bond in the United States next year and is targeting remittance inflows of $1 billion a month, its central bank chief told Reuters.
Elsewhere, oil prices in the global commodity market trended higher, with Brent Crude increasing by 1.07% to $72.9 per barrel, while WTI also rose by 1.29%, closing at $69.5 per barrel. #Naira Hits N1675 as CBN Abandons Dutch FX Auction FX Stability: CBN Sells 122.671m Dollars to 46 Authorised Dealers
