Naira Halts Gaining Streaks Amidst FX Subsidies

The Nigerian naira paused gaining streaks in the official window on Thursday amidst apex bank subsided US dollar sales to currency traders. The apex bank dictates exchange rate direction by selling foreign currencies to banks and Bureau de Change operators.

Analysts claimed that the central bank’s continued infusion of foreign currency into the market and its reduction of speculative activity were the main drivers of the most recent local currency rally. However, to influence the whole FX market, the monetary authority is selling forex cheaper to traders for onward sales.

For the first time in a long time, the Central Bank of Nigeria (CBN) took the direction of the exchange rate more seriously while simultaneously utilizing interest rate adjustments to counteract the rising headline inflation.

According to information from the FMDQ securities exchange, the Naira depreciated by 0.69%, closing at ₦1,309.39 per US dollar at the official market.  Trades were consummated within the N1,200– N1,486 band, according to Cordros Capital.

The naira closed the day at ₦1,300 to the US dollar on the parallel market, according to MarketForces Africa’s channel checks. This occurred after regulated currency dealers in the alternative market purchased $10,000 in US dollars for N1251.

This week, the apex bank sold another round of $10,000 to each of the eligible Bureau de Change operators at N1,251 with an allowable spread capped at 1.5% in an effort to control exchange rate direction.

This has assisted in stabilising the value of the naira over the last week as CBN Governor Yemi Cardoso’s regulatory measures become more stringent. Fx liqudity eased moderately across market due to sustain US dollar injections.

Nigeria’s FX reserves weakened further this week, as the gross reserves level fell by about $312 million to $33.95 billion.  In the global commodity market, oil prices took a positive turn amidst geopolitical pressures.

West Texas Intermediate crude saw a 1.58% increase to $82.64 per barrel, while Brent crude saw a 1.42% increase to $86.62 per barrel. Naira Halts Gaining Streaks Amidst FX Subsidies Afreximbank Closes $282m India-Focused Club Deal
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