Naira Hits New Low despite $124m FX Injection
In the forex market, the naira hits a new low against the dominant foreign currency, the US dollar, despite the Apex Bank intervention sales on Monday.
The exchange rate worsened by 2.90% to N1612 the same day when the Central Bank of Nigeria (CBN) pumped additional US dollars to bolster the volume of FX available in the supply side of the currency market.
The interbank market remained bid as sustained demand pressure persisted, largely driven by foreign portfolio investors (FPIs) looking to exit amid a global risk-off sentiment, AIICO Capital Limited said.
To ease the pressure, the CBN intervened in the NAFEM market, selling $124 million at rates between N1,595 and N1,611. The US dollar to Nigerian naira pair traded within a range of N1,590 to N1,655, with the Naira ultimately depreciating by 2.89% to close at N1,612.2368.
Analysts said offshore investors are likely to intensify selling pressure as risk aversion grows, though AIICO Capital anticipates continued CBN intervention to stabilize the market.
In March, the Naira experienced significant depreciation due to persistent demand pressure in the forex market. Despite the CBN intervening with substantial dollar sales totaling $668.8 million, the naira weakened by 2.97%, closing at N1,536.82/$ from N1,492.49/$ at the start of the month.
The market opened at N1,510/$, and demand remained robust, particularly from foreign portfolio investors and local corporates. The parallel market mirrored this trend, depreciating by N43.50/$ to N1,536.00/$.
FX liquidity in the currency market improved in the middle of March, supported by the CBN interventions, but demand continued to outstrip supply. Oil prices fell nearly 2% on Monday, reaching close to a four-year low, as concerns mounted that President Trump’s latest tariffs could trigger a global recession and weaken energy demand.
The day was highly volatile, with crude prices swinging by over $3 overnight and rebounding slightly after the White House dismissed reports of a tariff pause as “fake news.”
Brent crude dropped $1.24, or 1.9%, to $64.34, while WTI declined $1.21, or 2%, to $60.78. After last week’s 11% drop, both benchmarks were set for their lowest close since April 2021.
Meanwhile, gold prices fell 1.3% to $2,999.49 as investors flocked to the dollar, though broader economic uncertainty kept market sentiment positive on bullion. #Naira Hits New Low despite $124m FX Injection Yield Slides on Post Auction Demand for Nigerian Treasury Bills
