Naira Struggle Eased as CBN Keeps FX Tap Open
The Nigerian naira experienced a mild struggle against the dominant currency, the US dollar, across the foreign exchange market as the monetray authority continued to boost FX supply.
The Apex Bank’s sustained support for the naira has helped the local currency’s stability; outside of this, the exchange rates would have worsened significantly. Market analysts think FX sales to banks remain a short-term approach to solving Nigeria’s exchange rate conundrum.
According to spot data obtained, the local currency depreciated by 0.01% to close at ₦1,530.62 per US dollar in the foreign exchange market, reflecting less weighty pressure on FX levels in the official window.
The naira has been facing pressures after data showed that FX inflows into the official window slipped from $1.34 billion to $1 billion last week. Since then, the monetary authority has maintained FX sales to banks.
“Once there is sufficient US dollar liquidity in the banks, Bureau de Change (BDCs) operators are unlikely to face a a foreign currency shortage following Apex Bank’s approved $25,000 weekly FX purchase from banks,” analysts said in a chat forum with MarketForces Africa.
For sixth times in two weeks, the Central Bank of Nigeria has kept its FX tap open to boost the amount of US dollar available at the supply side in the currency market.
Hence, the Nigerian foreign exchange market experienced relative stability on Thursday, supported by an improved supply of the US dollar. The CBN sold $92.1 million at rates between N1,52617 and N1,535, AIICO Capital Limited said in an update.
This marked the sixth consecutive FX intervention sales to authorised dealer banks by the CBN. On Wednesday, the Apex bank had sold $44.75 million within the range of N1,522.70 and N1,531 to manage the naira exposure to the rising US dollar.
In the parallel market, the naira remained flat at N1585 as demand pressures eased following improved supply to banks. Oil prices climbed on Thursday as renewed tensions in the Middle East and fresh U.S. sanctions on Iran offset the impact of a stronger dollar.
Brent crude futures gained $1.22, or 1.72%, to settle at $72 per barrel. Meanwhile, the U.S. West Texas Intermediate (WTI) crude contract for April, which expired on Thursday, rose $1.10, or 1.64%, to close at $68.26.
Gold prices retreated after reaching a record high earlier in the session, though they remained supported by expectations of Federal Reserve rate cuts and ongoing geopolitical uncertainty. Spot gold dipped 0.3% to $3,038.79 per ounce by following profit-taking, after touching an all-time high of $3,057.21. Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces
