Naira Rallies as CBN Flood Currency Market with Dollars
The naira sustained its uptrend against the dollar with sizeable foreign currency sales supported by the Central Bank of Nigeria (CBN), affirming analysts’ positions that the spot rate would trade range-bound in the short term.
The naira closed at N1532.51 per dollar at the official foreign exchange market on Friday, according to Central Bank of Nigeria updated fx data, supported by intervention. The local currency appreciated from N1534.52 per dollar on the previous day as a result of support from exporters, foreign portfolio investor inflows, and a boost from corporate activities.
The exchange rate touched an intraday high of N1535.0000 per dollar, and the lowest rate for the day was N1529.75 per dollar amidst rising external reserves. The Apex Bank bolstered forex market liquidity with USD 166.00 million sold to authorised dealer banks to stem negative impacts of increased demand for greenbacks.
At the parallel market, the exchange rate closed at N1550 per dollar, reflecting moderate depreciation week on week due to rising demand for business and personal travelling allowances from FX users. The exchange rate gap between the official and parallel market rates settled at N23 per dollar.
Meanwhile, updated data from the CBN revealed that FX reserves increased for the sixth straight week, rising by USD431.86 million week on week to USD40.72 billion. The naira is expected to remain stable, underpinned by robust FX liquidity and an efficient FX market, analysts at Cordros Capital Limited said in a note.
“We expect sustained inflows from foreign portfolio investors (FPIs) due to existing carry trade opportunities and stronger market confidence,” the firm said in its update. Improving non-oil exports, as well as limited incentives for naira speculation, are expected to reinforce steady inflows from domestic sources.
