Naira Reclaims Value Ahead of Automated FX Platform Test Run
US dollar liquidity improved in the foreign exchange market this week. As a result of the reduction in demand for foreign currency, the naira appreciated by 0.07%, closing at N1,600.00 per US dollar at the official market.
The naira exchange rate rebounded over the last week despite weak and intermittent FX sales to authorised dealer banks ahead of November automated FX trading test run.
In the parallel market, the naira weakened to ₦1,730 versus greenback as demand for invisible FX payment remained elevated in the face of tight supply. Spot data from FMDQ platform showed that naira appreciated to N1,600 to the US dollar, representing a daily gain of N1.20.
Also, the total daily turnover increased to 284.93 million dollars on Friday up from 230.99 million dollars recorded on Thursday. At the Investor’s and Exporter’s (I&E) window, the Naira traded between N1,682 and N1,589.82 against the dollar ahead of FX automation text run.
Recall the Central Bank planned to automate foreign currency trades from December, ditching a nearly decade-old over-the-counter trading system in a bid to enhance transparency and remove market distortions.
The Apex Bank said the new system would “facilitate a market-driven exchange rate accessible to the public”. It also released new guidelines for players in the foreign exchange market.
“This development is expected to reduce speculative activities, eliminate market distortions and give the CBN improved oversight,” the bank said in a circular dated Oct. 2. The CBN said a two-week test run would be carried out in November, without specifying the exact dates.
Oil prices are set to increase by over 2% for the week, with today’s trading showing minimal changes as traders remained cautious due to rising tensions in the Middle East, just ahead of upcoming ceasefire talks in Gaza.
Brent crude is around $75.82 per barrel, and WTI is approximately $71.59.
In contrast, gold prices dipped today as investors took profits following a significant rally driven by geopolitical tensions and U.S. election concerns. #Naira Reclaims Value Ahead of Automated FX Platform Test Run Naira Drops Market Wide, Exchange Rates Gap Now N102
