Naira Rises by 10% on Sufficient FX Liquidity
FX WATCH: The exchange rate settled in favour of the Nigerian naira at the official, gaining about 10% on Monday, according to data from the FMDQ dashboard. It also saw a moderate rebound in the parallel market on the back of sufficient US dollar liquidity in the system.
Key market participants closed forex transactions a much better rates than previously experienced in the past week ahead of yuletide. Some market analysts believe that the local currency would gain weight over an expected year-end influx of foreign currency from the diaspora.
According to analysts who spoke with MarketForces Africa at the time of filing this report, Nigerians outside the shore have started remitting foreign currency home for their loved ones.
“This is not peak period for imports”, LSintelligence Associates said in a note review by MarketForces Africa, saying that year-end forex demand could be insignificant enough to drive naira wild.
Despite increased optimism about oil export receipts, the external reserves continue to decline. However, market analysts are hoping that the decision to up Nigeria’s oil production output would be positive for the government. In the global commodity market, oil prices experienced a negative trend on Monday, with Brent Crude trading at $78 per barrel and WTI at $73.19 per barrel.
Data from the Central Bank of Nigeria (CBN) shows that the gross external reserve remained tightened around $33 billion band.
In the foreign exchange market, the Naira showed a strengthening against the US dollar, appreciating by 9.64% in the official market to close at N837.77, according to data from the FMDQ FX OTC dashboard.
In the parallel market, the Naira also appreciated by 0.34% day-on-day to close at N1,159 per dollar – possibly, the space would experience a supply glut as diaspora remittance flows. Nigeria Eurobond Slumps after CBN Resumes OMO Auction