Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces
The naira dropped against the US dollar in the foreign exchange market as demand for greenback continues to outpace the amount of hard currency in the supply side.
FX spot data showed that the Naira depreciated by 0.16% in the official window, closing at ₦1,530.52 per dollar. Similarly, the Naira ended the day at ₦1,580 per dollar in the parallel market.
This left the gap between the two markets at N50 amidst sustained FX intervention by the Central Bank of Nigeria (CBN). The monetary authority has continued to boost FX inflows by selling US dollar to authorised dealer banks.
Since the start of the year, the FX rate has remained relatively stable, supported by intensified CBN efforts, a positive current account position, and increased foreign inflows.
However, the outlook faces a key risk from the expectation of weaker global crude oil prices, which could impact Nigeria’s FX stability and stoke some inflationary worries, CardinalStone Securities Limited said in a report.
Analysts said so far, Brent crude prices have declined by 5.5% year to date, driven by expectations of rising global crude supply, policy shifts, and weakening demand.
Notably, the U.S’ push to boost oil production, popularly referred to as “drill-baby-drill”, has led the Energy Information Administration (EIA) to revise its 2025 crude production forecast to 13.61 mbpd, up from the previous estimate of 13.55 mbpd and the 2024 average of 13.22 mbpd.
OPEC+ has reaffirmed its December 2024 decision to gradually unwind 2.20 mbpd in voluntary production cuts starting April 1, 2025. CardinalStone said this move could further increase supply and put downward pressure on oil prices. #Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces#
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