Naira Spot Rate Drops as Foreign Currency Payments Increase
The naira declined following a period of gains in the Nigerian foreign exchange market (NFEM), attributed to a heightened demand for US dollar transactions at the official exchange rate on Thursday.
The Naira ended its 3-day successive appreciation today, weakening by 0.57% or ₦7.77 against the U.S dollar, suggesting higher demand for foreign payments beyond the recent past record.
The spot rate depreciation was driven by profit-taking by some Foreign Portfolio Investors (FPIs) as demand built up against a limited supply, AIICO Capital Limited told investors in a note.
FX traders noted that the Naira traded higher within the ₦1,361.80/$ and ₦1,370.00/$ band during the session before settling at ₦1,366.06/$.
Meanwhile, data from the Central Bank revealed that Nigeria’s gross external reserves edged higher to $46.81 billion, reflecting an addition of $106.24 million day-on-day.
Foreign reserves-maintained accretion amidst crude oil price fluctuations in the global commodity market. Oil prices slipped by more than 3% on Thursday after the U.S. and Iran agreed to hold talks in Oman on Friday, easing concerns around any bottlenecks in Iranian crude supplies.
Brent crude lost 2.42% or $1.68, hovering around $67.78 per barrel, while U.S. West Texas Intermediate (WTI) declined 2.39%, to around $63.58 per barrel.
Similarly, gold prices fell as a stronger U.S. dollar pressured prices, reducing demand for the non-yielding metal and prompting profit-taking after recent gains. Spot gold price dipped 185bps to $4,871.63/oz, while U.S. gold futures shed 121bps, hovering around $4,890.95/oz.
Analysts expect oil prices to remain under pressure as markets watch U.S.–Iran talks for signs of easing geopolitical risk, while gold may continue to face headwinds from a firmer dollar and reduced safe-haven demand. Fidelity Bank Gains 6.3% as Investors Take Positions
