Naira Rallies Amidst FX Scarcity
The Nigerian naira strengthened against the United States (US) dollar at the Investors and Exporters foreign exchange window, trading at N781.34 compared to N782.38. Similarly, the local currency also lost against the British pound, Euro, and Japanese Yen, according to the FX market tracked by MarketForces Africa.
There have been sustained shortages in foreign currency supply in the market, causing an imbalance between demand and supply levels. The apex bank backlog of FX owed to foreign investors is also seen as a downside. Unfortunately, there have been low inflows into foreign reserves to act as a buffer to support the naira.
The low accretion to external reserves occurs as a result of Nigeria’s oil swap deal, though global oil market continues to rally. Yesterday, Brent crude fell 0.42% to $87 per barrel, while WTI crude lost 0.62% to $83.87 per barrel. Nigeria’s external reserves remained below $34 billion despite moderation in forex market intervention since June devaluation.
Oil futures were lower but were supported by a renewed investor risk appetite following a lower-than-expected US inflation reading. In the parallel market, however, the Naira witnessed a 2.73% depreciation against the US dollar, with the rate sliding to N940.
Analysts maintained that FX volatility would remain due to a backlog of foreign currency demand and scarcity of the greenback at the official and retail ends of the market. #Naira Rallies Amidst FX Scarcity Naira Steadies as Banks Issue Update on FX Purchase