Naira Skids to N1485, FX Inflows Boost External Reserves
The Nigerian local currency, the naira, tumbled against the US dollar in the official window on Thursday due to lingering FX liquidity crisis that has failed to ease. Data from FMDQ platform where daily spot rate are quoted showed that the Naira depreciated against the dollar by 0.16%, closing at ₦1,485.36 per US dollar.
Despite the lingering negative pricing, the outlook on the local currency remains bullish as analysts noted that the naira will benefit from FX inflows through the World Bank loan. Nigeria has received more US dollar inflows into the external reserves, data obtained from the Central Bank of Nigeria (CBN) suggest.
Gross external reserves climbed to $35.578 billion, after successive foreign currency inflows from various sources, which some analysts suggest relate to NNPCL revenue collections by the apex bank.
In the global commodity market, Brent crude futures increased by 0.54% to $85.79 a barrel, while U.S. West Texas Intermediate crude futures advanced by 0.70% to $81.28 a barrel. Nigeria lost huge revenue due to under production of crude oil which accounts for about 90% of the nation’s foreign currency receipt.
Crude output slipped to 1.25 million barrels per day in the recent past months, according to monthly oil report by the Organisation of Petroleum Exporting Countries. To combat FX scarcity challenge, the authority had announced plan to issue US dollar denominated domestic bonds in June, 2024.
The timing, and plan still remain scanty. Latest World Bank loan could stop US dollar domestic bond issuance plan, according to LSintelligence Associates.
At the parallel market, the Naira closed at N1,470 per US dollar due to sizeable demand for foreign currency for invisible transactions. “We remain bullish on Naira over the short term”, Vetiva Capital Management Limited said in a macro update following the World Bank $2.25 billion loan approval.
Analysts said this combined $2.25 billion package provides immediate financial and technical support to Nigeria’s urgent efforts to stabilize the economy and scale up support to the poor and most economically at risk.
“We expect this package, alongside an earlier $900 million receipt from the Africa Export-Import Bank, to bolster the external reserve stock and stem the slide in the Naira. We remain bullish on the Naira over the short term because of this multilateral support”, the firm said.#Naira Skids to N1485, FX Inflows Boost External Reserves FIFA Ranking: Nigeria Drops from 30th to 38th Position
