Naira Rallies, Spot Rate Settles at N1547 on FX Injections
The naira appreciated against the US dollar, closing at N1547 per greenback at the Nigeria foreign exchange market (NFEM) as Central Bank (CBN) and foreign portfolio investors (FPIs) drive FX inflows.
The domestic currency appreciated at the official market by 26bps to close at N1,547.3636/$, while at the parallel market window, the Naira depreciated by 32bps to settle at N1,585.00/$
FX inflows strengthen with the CBN intervention and FPIs participation. Analysts at Cordros Capital Limited explained that exchange rate was supported by increased supply from FPIs who were looking to participate in the OMO auction. Also, the CBN injected USD61.00 million to banks this week.
Meanwhile, gross FX reserves declined for the fourth consecutive week, decreasing by USD219.56 million week on week to USD37.71 billion. In the forwards market, the naira rates mixed across contract, reflecting divergence in investors’ confidence in the exchange rate outlook.
One month FX forward contract appreciated by +0.2% to N1,579.78/USD, 3-month contract rose by +0.4% to N1,636.90/USD. But FX contract with one year tenor depreciated by -0.9% to N1,904.50/USD while 6-month contract closed flat.
Despite the continued stability of the naira, persistent global pressures, now intensified by renewed tensions in the Middle East, remain a downside risk. Analysts said they expect CBN to manage short-term volatility through interventions during periods of market shocks.#Naira Rallies, Spot Rate Settles at N1547 on FX Injections#
