Nigerian Naira Slides on 174% Increase in Interbank FX Deals
The naira depreciated against the US dollar at the Nigerian foreign exchange market (NFEM), closing at N1,329 amidst a slowdown in FX liquidity.
The FX transactions were relatively stable, although the naira weakened slightly during the session as demand for international payments picked up.
The NFEM rate closed at N1,329.15/$, compared with ₦1,326.30/$ on the previous trading day, representing N2.85 depreciation, equivalent to 0.21%.
Transactions were consummated between N1326 and N1333.5000, which signals there was demand pressure at the official forex market on Tuesday.
Confirming this, data released by the Central Bank showed a sharp increase in financial institutions’ activities at the forex market – both turnover and deal counts spiked.
NFEM interbank FX turnover increased by more than 174% to $262.120 million, according to the Central Bank’s daily FX update, up from $95.611 million the previous day.
The number of interbank deals at the window also surged to 172, up from 109 reported the previous day. At the parallel market, the exchange rate closed at N1370 per dollar, gaining N10 from N1380 previously reported.
FX analysts said the Central Bank of Nigeria appears to be targeting an exchange rate around the current level following the last round of intervention conducted last week.
By market consensus, the Nigerian forex market is expected to remain relatively stable in the near term, with trading likely to be influenced by dollar demand and available liquidity.
The naira may continue to experience modest movements as market participants respond to prevailing demand and supply conditions, Herwood Securities Limited said in a note.
Meanwhile, gross external reserves climbed further to $54.607 billion, its highest level since 2008, supported by an increase in hydrocarbon revenue. CBN Allots N4.4trn in OMO Bills to Investors, Rates Below 20%
