Naira Rallies as Foreign Reserves Keep Uptrend
The naira strengthened to N1584 against the US dollar at the Nigerian foreign exchange market (NFEM) as foreign reserves continue to rise. The exchange rate trend was positive, supported by sufficient US dollar volume and an apparent slowdown in corporate demand.
Meanwhile, the local currency depreciated at the parallel market by 0.31% to N1,625 per greenback, while the FMDQ FX rate appreciated by 0.33% to N1,582.82.
The exchange rate improved further on Wednesday, buoyed by ample liquidity and reduced market volatility. Intraday trading saw the USD/NGN pair range between $/₦1,582.50 and $/₦1,590.00, with the naira ultimately appreciating by 37 bps to settle at $/₦1,584.4966.
“We do not expect major naira moves in the short term— current levels look stable”, AIICO Capital Limited said in its market update. Still, external reserves keep trending higher as inflows from various sources continue to pop in.
Data from the CBN showed that foreign reserves increased to $38.526 billion on Tuesday despite fluctuations in crude oil prices in the global commodity market.
On Wednesday, oil prices slipped after U.S. government data showed a rise in crude and fuel inventories, dampening sentiment ahead of the summer driving season, when demand typically increases.
Earlier in the day, prices had gained around 1% on concerns that Israel might strike Iranian nuclear sites, threatening potential supply disruptions.
Brent crude declined 12 cents to $65.26 per barrel, while U.S. West Texas Intermediate fell 9 cents to $61.94. Meanwhile, gold prices climbed for a third consecutive session, reaching a one-week high.
Spot gold rose 0.7% to $3,312.51 an ounce, supported by a weaker dollar and heightened geopolitical uncertainty. Should tensions worsen, oil markets could face short-term trade disruptions or a 500,000-bpd supply cut—though OPEC+ has sufficient spare capacity to compensate swiftly, analysts said. #Naira Rallies as Foreign Reserves Keep Uptrend#
