Nigerian Naira Falls to N1,331 as FX Liquidity Squeezes
FX WATCH: Renewed signs of foreign currency liquidity squeeze dragged the naira down to N1,331 per US dollar at the Nigerian foreign exchange market (NFEM) on Thursday.
Daily FX data released by the Central Bank of Nigeria (CBN) showed that the local unit depreciated from N1329.8568 quoted on Wednesday to N1331.2812 per greenback.
The Apex Bank data revealed that exchange rates hovered between N1328.5000 and N1333 per forex transactions executed during the day, suggesting a surge in US dollar demand in excess of market liquidity.
Despite an increase in interbank deals among the financial institutions acting as market makers, US dollar volume went down from the previous record.
Interbank FX turnover declined by more than 6% to $84.217 million, according to Central Bank data, from $89.355 million recorded the previous day.
Amidst FX liquidity fluctuations at the NFEM window and naira depreciation, Nigeria’s foreign reserves edged higher, supported by accretion from across key sources.
Gross external reserves surged to $54.668 billion as of Sept 16, from $54.607 billion, enhancing the CBN buffer to support the local currency.
Broadstreet analysts are largely naira bullish, with a market consensus’s formed on sustained FX inflows in the local economy and rising external reserves.
