Naira Value Depreciates as U.S Dollar Supply Tightens
The naira gave up value against the dominant US dollar as FX supply weakened versus rising demand for the greenback at the official window.
Reflecting the FX shortage, the naira depreciated further at the informal currency market amidst expectations that remittances from Nigerians abroad ahead of Yuletide will strengthen inflows.
The spot FX rate at the official window depreciated by 0.16% to N1,447.65 per dollar. In the parallel market, the naira lost 18 basis points to close at N1460 per dollar.
The exchange rates direction reflect softer currency sentiment and renewed pressure across both the regulated official segment and the informal foreign exchange market.
The spot rate touched an intraday high of N1450 per dollar, and briefly reached a low of N1443.5000 as some analysts reported the Central Bank presence in the forex market.
A look at the CBN portal showed that the external reserves recorded additional inflows that boosted the gross balance to $44.914 billion on Tuesday. The sustained accretion that foreign reserves is more likely to cross $45 billion in December.
Yemi Cardoso, the CBN governor told a forum in November that Nigeria’s foreign reserves reached $46.70 billion, an insider FX data not immediately back up with data.
In the global forex market, the dollar has traded heavily in recent days, and it is consolidating in narrow ranges with a slightly firmer bias today.
Elsewhere, Gold prices are currently on a bullish rally, having experienced a significant pullback and support test. The precious metal appears to have regained its shine as bulls returned to the party, pushing prices to a high of $4240/oz in the early part of the US session.
The current rally and supporting Gold’s valuation is the aggressive market expectation of impending monetary policy easing by the US Federal Reserve.
Current forecasts indicate an 88% probability of a US interest rate cut in December, with broader market consensus pricing in approximately 90 basis points of easing by the end of 2026.
