Naira Sees 2.65% Gain as FX Liquidity Increases
The Nigerian naira gained 2.65% week on week following latest support from the Central Bank of Nigeria (CBN). According to data from the FMDQ platform, the Naira appreciated against the US dollar by 2.65% week-on-week, reaching $1,574.20 in the last trading session of the week.
During the week, the CBN sold $876.26 million at the retail Dutch auction (rDAS) at an exchange rate of ₦1,495 per dollar to 26 dealer banks. Meanwhile, total bids were valued at $1.18 billion across 32 authorized dealer banks, of which six authorized dealers were denied.
Data from the apex bank showed that Nigeria’s FX reserves improved further, albeit at a slower pace, as the gross reserves level grew by USD12.06 million to USD36.85 billion.
Analysts highlighted that the Retail Dutch Auction by the apex bank on Tuesday eased pressure on the currency, with the naira appreciating to N1,574.20 per US dollar at the Nigerian autonomous FX market.
Total turnover at the window decreased by 58.7% from the beginning of the week to USD472.67 million on Thursday, with trades consummated within the N1,520.00 – N1,628.00/USD band.
In the forwards market, the FX rate on the 1-month gained +0.2% to N1,622.10 per US dollar. However, the 3-month forward contract was unchanged at N1,684.56. Elsewhere, the rates declined on the 6-month forward contract by 0.9% to N1,773.76 and the 1-year contract depreciated by1.9% to N1,959.58.
Analysts noted that foreign portfolio investors (FPI) participation in the FX market improved as the CBN’s move to stabilize the naira increased investor confidence.
“While we anticipate FX liquidity will remain frail over the short-term, we expect the naira to trade with less volatility due to the moderation in demand pressure”, Cordros Capital Limited said in a note. #Naira Sees 2.65% Gain as FX Liquidity Increases
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