Naira Little Changed as Forex Market Activities Ease
The naira exchange rate was little changed at the Nigerian foreign exchange market (NFEM) as trading activities among financial institutions and market makers eased on Friday.
The naira dipped slightly to N1370.1904 from N1370.1516 the previous day. The spot FX rate hovered between N1369 and N1373 during the trading sessions, reflecting the absence of significant pressures from international payments.
The monetary value of all foreign exchange transactions at the official window declined by about 18% to $70.430 million across 82 interbank deals, from $85.517 million the previous day.
FX market liquidity squeezed for three consecutive trading sessions, prompting mild intervention by the Central Bank of Nigeria (CBN) to stabilise the local unit.
“Market conditions improved shortly after the open following the Central Bank of Nigeria (CBN)’s intervention through modest dollar sales, which boosted liquidity and supported stronger trading activity”, Herwood Capital Limited said in a note.
The local currency exchange rate was pushed above N1390 per dollar in early trading, despite inflows from Foreign Portfolio Investors (FPIs), as demand outweighed available supply.
In its daily FX update, the CBN reported that currency traders noted the naira closed the week at N1370.1904 per dollar, down from N1380.9329 at the beginning of the week.
Oil prices ticked higher on Friday as investors cautiously bet that peace efforts between the United States and Iran would hold, easing fears of fresh supply disruptions in the Middle East.
However, gains remained modest as higher crude exports from Gulf producers capped the upside ahead of the long U.S. Independence Day weekend.
Brent crude futures rose 0.6% to $72.3 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.5% to $69 a barrel.
Both benchmarks were on track to end the week little changed, with Brent down about 0.02% and WTI up around 0.12%, reflecting a sharp cooling in volatility after the recent geopolitical turmoil.
