Naira Halts Rally on Foreign Payments, FX Supply Gap
The surge in international payment requests at the Nigerian foreign exchange market (NFEM) nudged the value of the naira, the local currency, downward again, reflecting the absence of the Central Bank’s intervention.
For the second consecutive day, the official rate pulled back against the US dollar, settling at N1,355 against some naira bull analysts’ expectations.
The authority has refrained from the official window as the naira embarked on a fast-and-furious gain streak in recent days. The FX supply side was eclipsed by growing demand for foreign payments.
Exporters inflows, non-bank corporate supply, and other market participants contribution had enhanced FX liquidity level. Intermittent FX inflows pause stoked pressures on the exchange rate.
Hence, the official rate could not keep pace with growing foreign payments logs during the week.
Daily FX data released by the Central Bank revealed that the spot FX rate depreciated by 0.13% to ₦1,355.42/$ at the NFEM window on Friday. Signaling a reversal from the sudden rally, the intraday rate weakened to N1358, which coincidentally happened to be the closing rate at the CBN window.
Meanwhile, the naira climbed to N1400 in the parallel market, reflecting divergent currency dynamics between the regulated official segment and the informal foreign exchange market.
Elsewhere, oil prices ended Friday little changed after a volatile session that encapsulated the market’s recent tug-of-war between macroeconomic and geopolitical support versus expectations for potentially more Opec-plus supply.
Data from the global commodity market indicates that oil recorded its first back-to-back weekly drop this year as traders weighed the prospect of expanded OPEC+ supplies against US-Iran nuclear talks and recent weakness in wider markets.
West Texas Intermediate fell 1% for the week and ended the day little changed on Friday. President Donald Trump said the US deployed an additional aircraft carrier to the Middle East in case a nuclear deal isn’t reached with Iran.
“If we don’t have a deal, we’ll need it,” Trump said at the White House. He added he thinks negotiations will ultimately be successful. Traders have been watching for any uptick in tensions between Washington and Tehran that could pose a threat to supply from the Middle East.
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