Naira Spot Rate Appreciates to N1,343 Against US Dollar
- Nigeria’s foreign reserves stand above $52bn
- Central Bank sold $251m to Banks last Week
- FX liquidity eclipses US dollar demand
- Foreign investors’ inflows drive Forex Market liquidity
- Interbank FX Turnover Declines 17%, Deal Count Falls
The Nigerian naira spot rate appreciated to N1,343 against the US dollar on Tuesday, as the currency continued to gain momentum in the foreign exchange market.
The sovereign unit has beaten some analysts’ year-end estimates of N1350 per dollar, supported by inflows from foreign portfolio investors, non-bank corporates, and the Central Bank’s latest FX injection, totalling $251 million last week.
Pressure from US dollar demand was well under the supply curve radar at the Nigerian foreign exchange market (NFEM) – driven by robust liquidity conditions in the currency market.
Nigeria has seen a significant surge in hard-currency inflows into its financial markets, driven by elevated yields on naira-denominated assets.
Daily FX data released by the authority showed that the official exchange rate closed at N1343.3202 on Tuesday from N1349.5372 per US dollar.
During the day, transactions at the NFEM window were executed between N1340 and N1353.5000, confirming the absence of pressures at the official market.
MarketForces Africa gathered that NFEM interbank FX turnover declined as financial institutions’ activities moderated. Interbank FX turnover dropped to $364.709 million, down by about 17% in 24 hours from $437.529 million reported on Monday.
Broadstreet analysts anticipate that structural FX-supportive developments will continue to provide medium-term stability, including improvements in external reserves, which stand above $52 billion.
FX inflows continue to increase due to stronger sovereign credit perception following S&P’s recent upgrade of Nigeria’s rating from B – to B, and anticipated inflows linked to the proposed Dangote Refinery Initial Public Offering.
Meanwhile, the US dollar is mostly firmer against the major currencies. The market has pushed the dollar to its best level since last month’s intervention against the yen.
The US-Iran 60-day memorandum of understanding, struck on June 17, ended yesterday. Its significance seems questionable given Washington and Tehran’s inconsistent actions.
