Naira Sees Double Digit Daily Gain on Overbought USD

In an effort to remain a reliable store of value, the Nigerian naira reclaimed some part of its largest daily loss in the forex market on Thursday as currency traders look toward year-end inflows.

In the foreign exchange market, the Naira appreciated by 11.37% day-on-day in the official market to close at N843.07- after the previous day’s demand kick.

On Wednesday, the local currency had tumbled by 18% to N951.11 at the Nigeria Autonomous Foreign Exchange Market (NAFEM) as demand for the US dollar shadowed forex market supply.

Forex analysts are projecting that December remittance from Nigerians in the diaspora would reduce pressure on FX demand across the markets.

However, there appears to be limited inflows as external reserves jerked down below $33 billion mark, data from the Central Bank of Nigeria (CBN) shows.

The gap between official and parallel market rates had collapsed but exchange rate movements have become a downside to FX convergence.

MarketForces Africa noted that there has been intermittent movement since the apex bank absconded from supporting the naira by allowing forces of demand and supply to allocate resources.

The CBN has halted forex market intervention for the past six weeks as the monetary authority maintains a plan to clear FX backlog, and then allow the local currency to float.

In the parallel market, the Naira depreciated by 0.17% day-on-day to close at N1,171 per dollar due to sustained demand for the dollar. The oil market still facing pressures means lower export inflows, even though previous swap arrangements continue to limit inflows into the economy. Nigeria Eurobond Slumps after CBN Resumes OMO Auction

Data from the global commodity market showed there was a moderate recovery after Brent lost 4% on Wednesday. On Thursday, oil prices showed a positive trend, with Brent Crude trading at $74.91 per barrel and WTI at $70.27 per barrel.