Naira Sees Rapid Gain on 8-Day FX Intervention
The naira gained strongly against the US dollar in the foreign exchange (FX) market on the Central Bank of Nigeria’s (CBN) aggressive interventions. The naira appreciated by 1.1% to N1,531.20 per US dollar at the Nigerian Foreign Exchange Market (NFEM) as demand pressures eased.
This week, the Central Bank sold the US dollar to banks to boost FX liquidity in the official window with the aim to stem the negative tide against the local currency. On Friday, the authority sold $52 million between the rates of N1,549.55 and N1,553.
Total volume of US dollars sold to authorised dealers in four straight trading sessions increased to $113.85 million at the close of the week. Following these interventions, the FX reserves level declined by USD303.95 million week on week to USD39.99 billion.
Week-on-week comparison revealed that the naira gained N16.38 and N15.00 to close at N1,531.20 and N1,655.0 in the official and parallel markets, respectively. In the forwards market, the naira rates decreased across contracts. The 1-month FX forward contract declined by -0.1% to N1,591.41 per dollar.
Also, the 3-month FX contract declined by -0.8% to N1,667.93 while the 6-month forward contract fell by -1.6% to N1,779.33. The 1-year forward contract dipped by -1.4% to N1,962.32 per dollar. .
Analysts at Cordros Capital Limited expect FX demand pressure to remain intact, saying sustained CBN intervention and increased transparency and market efficiency from the adoption of the Electronic Foreign Exchange Matching System (EFEMS) will support naira stability.
In the global commodity market, oil prices rose on Friday, with Brent Crude climbing by 0.49% to settle at $78.67 per barrel, while West Texas Intermediate (WTI) advanced by 0.37% to close at $74.89 per barrel. #Naira Sees Rapid Gain on 8-Day FX Intervention Chinese Firm Expresses Support for $20b Ogidigben Gas Project
