Nigerian Naira Tumbles as Interbank FX Turnover, Deals Crash
MarketForces Africa – The Nigerian naira tumbled against the US dollar, losing about N5 on foreign currency payments executed on Tuesday at the official window amid a sharp slowdown in interbank activities.
The local unit exchange rate at the Nigerian Foreign Exchange Market (NFEM) depreciated by N4.76 to close at N1,364.8992 per dollar on Tuesday, from N1360.1415 quoted the previous day.
Foreign portfolio investors continue to strengthen the supply side, and the absence of open market operations keeps liquidity tight.
Daily FX update obtained from the authority revealed that transactions were conducted between N1361 and N1365.5000, reflecting renewed FX squeeze at the official window.
Activities of Nigerian banks acting as market makers eased, with data showing interbank FX turnover declining to $29.060 million, down by more than 86% from $213.845 million the previous day.
MarketForces Africa gathered that the number of interbank deals settled also reduced to 47 from 182 the previous day trading session.
US dollar volume traded reduced as banks’ bids for customers seeking forex payments declined, with the tightened market liquidity having negative effects on the naira.
In the parallel market, the naira was steadied at N1,420.00, indicating relative stability in the informal segment.
Market confidence remained strong, Broadstreet analysts told MarketForces Africa in a chat, citing sustained inflows into Nigeria’s foreign reserves amidst uncertainties in the global commodity market.
Nigeria’s gross external reserves increased by US$83.81 million to US$52.14 billion, the Apex Bank FX data revealed.
The continued foreign reserves boost provides a stronger external liquidity buffer and should support the CBN’s capacity to maintain orderly conditions in the FX market, AIICO Capital Limited told investors in its market update.
“We expect the naira to remain broadly stable, with market participants monitoring the pace of reserve accumulation and foreign exchange inflows for further direction”, the investment firm said. Nigerian Treasury Bills Yields Fall on Naira Asset Attractiveness
