Naira Plunges after FX Supply Shrinks by 40%
The naira plunged against the US dollar by three basis points, or 2 bps, closing at N1,537.03 in the official market. The exchange rate came under pressure this week as aggressive FX intervention by the Central Bank of Nigeria (CBN) eased.
Unlike the FX auction pattern in the latter part of 2024, the foreign exchange market has seen reduced inflows in the supply side to wave off demand pressures. Data showed that inflows into the Nigerian autonomous forex market eased, though external reserves increased to $40.92 billion on Monday.
Last week, the Nigerian Autonomous Foreign Exchange Market (NAFEM) recorded an inflow of US$418.90 million, down by more than 40% from US$698.6 million in the previous week.
The CBN accounted for 20.05% of the total inflow, data revealed. Foreign portfolio investors (FPIs) contributed 13.28% to the supply side amidst N500 billion OMO bill auction.
The non-bank corporates accounted for 35.06% of total supply in the forex market; exporters’ inflows supplied 28.51% of the total FX flows, while other sources accounted for 3.10%.
In the parallel market, the exchange rate was relatively steady following a temporary window opened to Bureau de Change operators to bid for $25,000 from banks at the official rate.
On Tuesday, the exchange rate ended the day at N1,640 per dollar; the same amount the greenback was exchanged at the beginning of the week. In the global commodity market, oil prices trended higher on Tuesday, with Brent Crude at $76.77 per barrel and West Texas Intermediate (WTI) at $73.92 per barrel. Ministry Seeks $2 billion Fibre Optics Funding
