Naira Steadies as FX Reserves Rise in Absence of Dollar Scarcity
The Nigerian local currency, the naira, traded on a relatively steady note against the US dollar at the Nigerian Foreign Exchange Market (NFEM) on Monday as the Central Bank of Nigeria (CBN) showed a spot rate of N1598.68 per greenback.
The exchange rate appreciated over the last week due to sufficient dollar liquidity at the official window, while analysts said they noticed reduced demand for foreign currency last week.
However, at the parallel market, the naira weakened by 0.62% to close at N1,625 per greenback on the back of an increased demand for personal and business traveling allowances.
Nigeria’s foreign reserves saw additional inflows amidst uncertainties in the global commodity market. According to data from the CBN, gross external reserves increased to $38.378 billion amidst sustained FX inflows into the economy.
The US dollar – Nigerian naira pair traded lower last week, supported by improved sentiment, steady FX supply, and reduced dollar demand.
With minimal FX interventions, sales totalled $40 million towards the end of last week, the pair moved between ₦1595 and 1603, and the naira gained 46 bps week on week to close at ₦1,598.72.
Improved FX liquidity kept pressure subdued in the official window. Forex market analysts said they expect the naira to maintain stability in the short term, supported by CBN supply and exporter inflows.
However, the markets do not rule out upside pressure from rising demand or reduced intervention. #Naira Steadies as FX Reserves Rise in Absence of Dollar Scarcity
