Naira Weakens Against Dollar on FX Supply Shortfall
The Nigerian naira weakened against the US dollar at the foreign exchange market (FX), extending previous losses due to liquidity shortage at the official currency market on Monday.
According to daily FX data published by the Central Bank, the spot rate at the Nigerian Foreign Exchange Market (NFEM) depreciated 0.43% to ₦1,364.24/$.
Due to surging demand for international payments, the naira reached an intraday high of N1371 per dollar, and touched an intraday low of N1359.50 per dollar on Monday.
At $76.50 million, interbank liquidity printed higher across 79 deals, up from the $43.572 million reported on Friday.
Last week, the Naira depreciated by 1.10% week on week at the NFEM window, closing at N1,358.44/US$1, compared to N1,343.64/US$1 in the previous week.
This followed a relatively stronger midweek performance, during which the currency traded to an intraweek high of N1,348.45/US$1 before stabilising toward the close of the week.
In contrast, the parallel market rate strengthened slightly, with the Naira appreciating by 1.45% week on week to close at N1,380.00/US$1.
According to CBN data, gross external reserves declined to US$48.45 billion amid a month-long decline in inflows, amid uncertainties in the global commodity market.
The depletion of foreign reserves could be partly attributed to the CBN’s intervention in the FX market, a slew of Broad Street analysts maintain, with AAG Capital being the latest to warn that foreign investors have turned Nigeria into a quick fix.
In the parallel market, the naira rose again, trading at ₦1,375 per dollar, reflecting divergent currency dynamics between the official and the informal foreign exchange segments.
Oil prices rose after plans for a second round of peace talks between the US and Iran stalled again. Brent crude, the global benchmark for oil prices, rose over 3% to just under $109 a barrel on Monday.
US President Donald Trump said on Saturday that Washington had cancelled plans to send a team to Pakistan for negotiations with their Iranian counterparts.
Global energy supplies have been under intense pressure since the start of the Iran war as the crucial Strait of Hormuz waterway has been effectively closed by the conflict.
Iranian Foreign Minister Seyed Abbas Araghchi said on Sunday that “important discussions on bilateral matters and regional developments” were ongoing with Oman, its neighbour along the strait.
He posted on social media: “Our focus included ways to ensure safe transit that is to benefit all dear neighbours and the world. Our neighbours are our priority.”
Araghchi arrived in St Petersburg on Monday “with the aim of meeting and holding talks with Russian President Vladimir Putin,” the Iranian state-run news agency Irna reported.
Around a fifth of the world’s crude oil and liquified natural gas (LNG) usually passes through the Strait of Hormuz. South African Rand Holds Well Against US Dollar, Euro, GBP
