Naira Struggles to Retain Value after Celebrated FX Gains
The naira struggled to retain value in the foreign exchange market, depreciated against the US dollar on Thursday at the official window.
According to data from FMDQ Securities Exchange, the naira depreciated by 0.8% to N1,402.67 per greenback at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
From $32.106 billion, the gross balance in the nation’s external reserves continue to increase, settling at $32.254 billion at the end of April, according to data from the Central Bank of Nigeria (CBN).
Foreign reserves had peaked at about $34.45 billion in March before it spiral downward. The apex bank said the decline was a results of FX obligations.
At the official window, there have been surge in volume of US dollar demand by authorised market participants. However, FX liquidity has strained with no injections made into official window by the apex bank.
The CBN has maintained position that the spot rate at the official window would be determined by forces of demand and supply, based on its willing buyer, willing seller model. In the last two weeks, exchange rate has continue to worsen after rapid gain that saw exchange rate at less than N1100 per US dollar.
Things are not getting better yet at the informal currency trading segment. According to channel checks, the naira depreciated at the parallel market by 1.72%, closing at N1,363 per US dollar.
The depreciation comes on the back of rising demand pressure amid Nigeria’s falling crude oil production. Information obtained from the global commodity market showed bears trended has persisted.
Gold prices experienced a decline, dipping below $2,300 per ounce and nearing a four-week low. This movement occurred as investors remained engaged in evaluating the implications of the Federal Reserve’s recent policy decision to maintain interest rates at their current levels.
Brent and West Texas Intermediate continue to face pressures over negative demand outlook as US crude oil inventories rose sharply, according to data from Energy Information Administration. FCTA Disburses N6.32bn to Area Councils, Others
