Naira Trades Weak over Sustain FX Intervention Break
The Nigerian local currency, the naira, continues to face pressures across the forex markets as Central Bank sustained its fx intervention break. The naira depreciated to N1505.30 per US dollar on Friday, according to data from the FMDQ platform, where daily spot rates are quoted.
The sustained demand for foreign currency amidst zero intervention has caused the exchange rate to fail to equilibrate, but close near parallel market spot rate with marginal gap. Based on the latest exchange rate, the local currency lost N19.77 week on week compared to ₦1,485.53 recorded at the close of last week.
FX liquidity in the official market remained depressed as the apex bank maintained absence from intervening in the official market. This happened despite growing inflows into external reserves. Nigeria’s FX reserves grew for the fourth consecutive week, according to data from the central bank.
Information from the CBN showed that gross reserves level increased further by USD442.47 million to USD34.14 billion, thus proving import cover for seven months. The total turnover at the market advanced by 29.1% to USD845.03 million on Thursday from the beginning of the week, with trades consummated within the N1,4110 – N1,577, Cordros Capital Limited said in a note.
“We point out that the frail liquidity in the FX market underpinned the increased volatility on the naira this week as interventions by the CBN remain muted, together with weak offshore participation.
“In the short term, we anticipate the naira remaining under pressure, barring any significant FX interventions from the CBN”, Cordros Capital said. In its latest report, the Nigerian Exchange said transaction levels were boosted by increased inflows from local and foreign investors.
Specifically, inflows from foreign investors increased by 2.9% months on months to N124.28 billion in May from N120.83 billion in April due to improved sentiment amidst expectation that the Nigerian economy would rebound.
At the parallel market, the Naira closed at N1,514 per US dollar over accelerating foreign currency demand for invisible FX transaction. #Naira Trades Weak over Sustain FX Intervention Break ICAN Urges FG to Invest More in Agriculture, SMEs
