Parallel Market Premium Disappears as Naira Exchange Rates Converge
The naira declined across Nigeria’s foreign exchange markets as the Central Bank paused intervention. However, the slight downward movement has wiped off the parallel market premium as the two FX market rates converged again.
FX spot data from the FMDQ platform showed that the official US dollar to naira rate depreciated to N1500.80 per US dollar. Transactions were consummated between $/₦1,497.10 and $/₦1,505.00 at the Nigerian Foreign Exchange Market on Wednesday.
US dollar demand in the market surpassed the amount of foreign currency available to meet FX users requests for offshore payments.
The naira has remained stable since the beginning of the year as the CBN continues to drive liquidity in the forex market. The Apex Bank’s recent US dollar swap repayments also alleviate demand-side pressure in the forex market.
In the parallel market, the naira fell to N1500 per US dollar as Bureau de Change operators queued for weekly supply from banks.
Brent crude tumbled to its lowest level in over three years on Wednesday, pressured by a larger-than-expected rise in U.S. crude stockpiles, concerns over OPEC+ output plans for April, and U.S. tariffs on Canada, China, and Mexico.
Brent futures had dropped $2.58 (3.6%) to $68.46 per barrel after hitting $68.33, its weakest since December 2021. WTI crude fell $2.90 (4.3%) to $65.36, touching its lowest since May 2023. Meanwhile, gold prices edged higher, supported by a weaker dollar as investors awaited U.S. payroll data.
Spot gold rose 0.2% to $2,923.16 an ounce, while U.S. gold futures gained 0.4% to $2,933. Gross external reserve tracking below $39 billion at the last look today.
In a report, CardinalStone Partners Limited revealed that Nigeria’s foreign reserves drop reflects the servicing of external debt obligations, especially the repayment of 2020 IMF $3.5 billion Covid support under the Rapid Financing Instrument.
The repayment of the 5-year loan began in 2023, with the balance expected this year, analysts said. # Parallel Market Premium Disappears as Naira Exchange Rates Converge Oil Prices Rise as U.S Revokes Venezuela Agreement NGNUSD
