Naira Touches N1,395 to US Dollar as FX Order Book Surges
The naira exchange rate touched an intraday high of N1,395 per US dollar at the Nigerian Foreign Exchange Market (NFEM) as the FX shortfall increased sharply.
Market participants replaced naira holdings with foreign currency, softening local units amid sustained tightening of FX liquidity over the last 5 days.
The exchange rate at the official window closed at N1,361.8394 per US dollar, according to official data released by the monetary authority, depreciating from N1,344.4049 quoted the previous day.
Official data showed FX transactions ranged between N1,340 and N1,395 per US dollar during Friday’s trading session, reflecting accelerating US dollar demand bolstered by corporate year-end foreign payments.
The market was squeezed, and major FX intervention failed to curb pressure from US dollar outflow requests and a thin supply side. Analysts attribute the sharp naira depreciation to a surge in commercial buy orders ahead of festive seasons and pre-election demand.
A wide intraday gap between the high and low foreign exchange rate indicates high market volatility, sharp price swings, and a strong tug-of-war between buyers and sellers during the trading session.
Broadstreet FX analysts said FX buy orders at the official window exceeded sell orders, pushing the naira down against the US dollar.
Data released by the Central Bank of Nigeria (CBN) revealed that trading activity among market makers at the interbank foreign exchange window rose sharply on Friday.
NFEM interbank FX turnover hit its highest level in October at $1.01 billion, up about 219% from $316.545 million the previous day. Reflecting increased activity, the number of deals in the interbank market rose to 315 from 181, according to a CBN report.
In the global oil market, crude oil prices were poised to record significant weekly gains amid escalating geopolitical tensions in the Middle East.
Brent crude was set to gain about $6 per barrel, while West Texas Intermediate (WTI) posted a more modest increase, rising from around $99 per barrel on Monday to above $100 per barrel by week’s end.
At the time of writing, Brent crude was trading at $116.00 per barrel, while WTI stood at $102.50 per barrel, as market participants closely monitored developments in the Middle East, particularly Houthi attacks on Saudi Arabian infrastructure, including facilities operated by Saudi Aramco.
In contrast, Nigeria’s Bonny Light crude fell 1.98% to $123.97 per barrel, despite upward momentum in international benchmark prices. Nigeria now has $55.2 billion in gross external reserves, a sufficient buffer to support local currency movements. Oil Rises as Iran-Backed Houthis, Saudi Arabia Tensions Escalate
