Naira Slides as Growing FX Payments Weigh on Dollar Volume
The naira slid against the US dollar at the Nigerian foreign exchange market (NFEM) on Tuesday as international payments weighed on liquidity in the official window.
The spot rate depreciated from N1369.164 per dollar transacted in the currency market on Monday to N1370.6373 amidst a sharp slowdown in FX intervention by the authority.
The naira traded between N1365 and N1375 during the day, suggesting forex payments outweighed US dollar volume in the official window.
The local unit is holding its value, with persistent swings around the Apex Bank target amid a strong US dollar, which hit a multi-year high as investors migrated into safe-haven assets.
Daily FX update from the Central Bank of Nigeria (CBN) indicates that FX liquidity improved, but dollar volume was surpassed by strong dollar outflows on Tuesday.
Interbank FX turnover among financial institutions and market makers experienced a significant surge, reaching $125.314 million across 106 deals at the official window.
This marks a remarkable 92% increase from $65.206 million the previous day, highlighting robust market activity and growing investor confidence.
Elsewhere, Nigeria’s foreign reserves continue to grow, reaching $51.142 billion, up from $51.060 billion reported the previous day, according to the CBN’s latest update.
Elevated oil prices will keep the external reserves strong, analysts said in a discussion with MarketForces Africa, adding that the country has ramped up production, boosting fiscal performance with oil windfall.
Today, Oil prices fell, extending losses after a sharp decline in the previous session. Investors are waiting for clearer signs of progress regarding the resumption of crude oil flows through the Strait of Hormuz after talks between the United States and Iran.
Brent crude futures dropped by 20 cents, or 0.3%, to $77.70 a barrel. U.S. West Texas Intermediate crude fell by 12 cents, or 0.2%, to $73.74 a barrel. Prices sank more 3% on Monday after the United States granted Iran a 60-day sanctions waiver following preliminary talks. Naira Tumbles as Interbank FX Turnover Drops by 43%
