Naira Loses N9 as Nigeria’s FX Utilisation Jumps by 10%
The naira lost about N9 on each US dollar paired in the foreign exchange market last week on the back of weak FX liquidity on the supply side. FX spot data revealed that the local currency was down by N8.98 to close at N1,543.03 in the official market amidst first intervention sales by the Central Bank.
According to channel check, the exchange rate at the parallel market was stable at N1,655 in the absence of demand shock. As a result, the spread between the two markets narrowed to 7.26% from 7.88% the previous week, TrustBanc Financial Group Limited said in its note.
In the latter part of the week, CBN intervened in the forex market for the first time in 2025, offering $50 million within a range of N1,535 to N1,544 per greenback, traders said in their separate report.
CBN said in its quarterly bulletin that the total sectoral utilisation of foreign exchange in Nigeria increased by 10.1% year on year to USD 18.78 billion in 9M-2024 from USD 17.06 billion in the comparable period in 2023.
Analysts at Cordros Capital Limited highlighted that the outturn was supported by the substantial increase in the invisibles category even as FX utilisation for trade imports declined. In the same period, trade import utilisation dropped by 9.5% year on year to USD 10.58 billion from USD 11.69 billion.
This followed 12.7% declines in FX utilisation in the industrial sector to USD5.43 billion from USD6.23 billion. Also, manufactured product FX utilisation reduced by 23.0% year on year to USD1.33 billion from USD1.72 billion.
The downturn is likely to be driven by weakened demand induced by sustained currency depreciation and a highly inflationary environment despite the increases in utilisation for food products and in the oil sector.
Food products FX utilisation rose by 14.4% year on year to $1.87 billion in the period, from $1.64 billion, while oil sector FX utilisation rose by 40.1% to $1.125 billion. On the other hand, utilisation of FX for invisibles increased by 52.6% year on year to USD8.20 billion in 9M-2024 from USD5.37 billion, primarily due to the increases in utilisation across the financial and transport services.
“We expect a possible improvement in FX liquidity to support growth in the sectoral utilisation of FX. However, we believe imports are likely to remain constrained by elevated inflationary pressures and an expected reduction in petroleum imports due to increased domestic refining activities, which could tether growth in overall FX utilisation,” Cordros Capital Limited said.
Elsewhere, oil prices surged following the U.S. Treasury Department’s announcement of comprehensive sanctions targeting Russia’s oil sector. Brent crude rose to about $80 per barrel, while West Texas Intermediate (WTI) traded at around $76.57.
In addition, gold prices experienced a rebound as the uncertainty surrounding the policies of the incoming Trump administration heightened the appeal of safe-haven assets.
This trend persisted despite robust U.S. employment data that bolstered expectations that the Federal Reserve may not implement aggressive interest rate cuts this year. Gold was priced at about $2,688.40 per ounce. #Naira Loses N9 as Nigeria’s FX Utilisation Jumps by 10% Sell Pressure Stops Bitcoin from $100K Price Flirting
