Official, Parallel Markets FX Gap Widens as Naira Swings
The naira exchange rate gap between the official and informal segments widened to N28 on Wednesday, as the local currency continues to swing on both sides depending on FX liquidity.
The official spot rate weakened to N1,386.70 per dollar at the Nigerian foreign exchange market (NFEM) from N1382.68 per dollar, according to daily data published by the Central Bank.
Signalling increased pressure on the local currency, the spot rate depreciated to N1391.5000 during the trading session. Naira traded at an intraday low of N1376 from N1372 the previous day.
In the parallel market, the naira exchange rate dropped to N1415 per greenback due to the absence of Central Bank FX sales to eligible financial institutions, where Bureau de Change has access to $150k on a weekly basis. Consequently, the spread expanded to N28.30/USD from N12.37.
The Dollar Index has appreciated roughly 1.8% this month alone, following a modest 0.65% gain in February after January’s 1.35% slide. Against every G10 currency, the greenback has advanced since hostilities commenced.
All but the Canadian dollar and sterling have surrendered more than 1.5%. The move looks like strength. It is, in part. But analysts said it is also a story about positioning, leverage, and the jump in US rates.
Technically, the Dollar Index peaked for the year on March 13 near 100.50. Since then, it has found support just below 99.00, hovering above the 20-day moving average, which now sits a fraction above that level.
The index has spent little time above 100 since mid-last year, and the daily momentum indicators are rolling over from overbought territory. OpenAI to Discontinue Sora, AI Video App
