Spot Exchange Rates Diverge as CBN Sells $471m in 3-Day
Spot FX rates diverged as the Central Bank of Nigeria (CBN) sold more than $471 million in foreign exchange (FX) intervention to authorised dealer banks as part of effort to keep the exchange rate stable in the official window amidst rising offshore investors demand.
Foreign portfolio investors (FPIs) have been selling down their investment securities portfolios in search of safer assets amidst generally shift in global sentiment. African Eurobonds are feeling the negative impacts of U.S initiated trade war which key rating agency said would impacts global inflation and economic growth.
The U.S tariffs and decision by the Organisation of Petroleum Exporting Countries (OPEC) and allied members (OPEC+) to ramp up output caused prices of crude oil to drop sharply. The uncertainties in the global commodity market has exacerbate pressures on Nigerian government foreign revenue outlook against initial expectation used to set 2025 budget.
At the Nigeria Foreign Exchange Market (NFEM) window, the naira depreciated by 1.78% to N1,629, CardinalStone Partners Limited said in an update. At the parallel market, the naira depreciated by 4.32% to N1,638.40 per US dollar over surging demand, reversing previous trend.
At the FMDQ FX window, the naira appreciated by 0.93% to settle at N1616.88/$. The CBN provided some supply to the FX market, selling $149.4 million at the range of N1,603.11/$ – N1,620.00/$.
A total of $321.71 million in FX intervention sales were pumped into forex market on Friday and Monday. Given the current net FX reserve position, the CBN can sustain its last monthly FX sales totalling $714.65 million for 32 months, CardinalStone said.
Spot Exchange Rates Diverge as CBN Sells $471m in 3-Day Naira Tumbles as FX Demand Pressures Heat Up, Spread Reduces
