Naira Sold Off Amidst Liquidity Shortfall in FX Market
The naira swung negatively against the US dollar at the official currency market in Nigeria, and the parallel market rate also beamed with similar FX pressures.
Uncertainties around capital gains tax triggered significant selloffs in the equities market, and there were offshore position liquidations that increased demand for dollars.
Foreign portfolio investors sold the naira assets in an effort to optimise portfolio return, as the market now expected the monetary authority to significantly axe interest rate next week.
In the absence of sufficient FX liquidity, the official exchange rate pulled back from the previous day’s rally and ended worse than its quoted rate at the beginning of the week.
The spot FX rate depreciated versus the dollar in spite of Central Bank of Nigeria (CBN) FX intervention, suggesting offshore positions were liquidated in the financial market.
The CBN reports showed that the naira touched an intraday high of N1462 per dollar transaction closed, which is more than N2 above N1459.99 that was quoted for the same position on Thursday.
The naira spot FX rate briefly touched N1453.61 per dollar at the official window, a quote that worsened from the previous day—reflecting sustained pressure on the local currency.
The CBN exchange rate closed at N1456.72 per dollar on Friday, depreciated by 0.32% from N1452. In the parallel market, the exchange rate also fell by 0.41% to ₦1,475/$, signalling renewed pressure and fading positive sentiment toward the local currency. Dangote Cement Plunges as Investors Trim Shareholding
