Naira Plummets as External Reserves Surge to $36.506bn
The naira depreciated by 0.13% against the US dollar in the foreign exchange market as FX liquidity in the market remained depressed. Data from FMDQ platform showed that the naira closed at ₦1,611.40 per US dollar, a 0.13% depreciation from the previous close.
In the parallel market, the naira closed the day at an average of N1,576 per US dollar as FX demand for invisible payments climbed again. In the global commodity market, Crude oil declined as traders appeared unfazed by the risk of widening war between Israel and the Iran-backed militia Hezbollah.
Brent prices fell by 1.61% to $79.82, while West Texas Intermediate (WTI prices decreased by 1.71% to $75.84. Furthermore, the price of gold fell by 0.21% to $2,376.10 per ounce.
Nigeria’s foreign reserves climbed to $36.506 billion due to sustained inflows from various sources, including revenue accrued from NNPCL trades among others.
Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX) showed that total transactions in the domestic equities market contracted marginally by 0.2% to N354.55 billion in June from N355.38 billion.
Analysts highlighted that foreign investors primarily drove the decline in the review period. Foreign inflows which accounted for 23.2% of market transactions dropped by 33.9% to N82.19 billion from N124.28 billion in May.
The decline was attributed to weakening investors’ sentiments, primarily due to renewed FX liquidity constraints. Meanwhile, domestic transactions increased by 17.9% to N272.36 billion from N231.10 billion in May, 2024.
The surge was supported by a 34.7% and 0.4% surge across institutional and retail investors, respectively. Analysts noted that foreign portfolio investors (FPIs) who have exhibited a lackluster interest in domestic equities are likely to remain on the sidelines due to sustained FX liquidity challenges and elevated interest rates in advanced countries. #Naira Plummets as External Reserves Surge to $36.506bn
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