Exchange Rate Falls over High Demand for Dollar
The naira exchange rate depreciated at the Central Bank foreign exchange market due to surging demand for dollar payments at the official window.
The high forex payments above dollar volume at the official window caused the exchange rate to drop for the second consecutive day after posting a fast and furious rally.
According to the daily FX update released by the Central Bank of Nigeria, the exchange rate depreciated by 24bps or ₦3.24 against the U.S. dollar on Thursday.
The depreciation was driven by high USD demand pressure despite inflows from Foreign Portfolio Investors (FPIs) and local participants, AIICO Capital Limited said in a note.
Analysts reported that the Naira traded within the ₦1,332.25/$ and ₦1,350.00/$ band during the session before settling at ₦1,341.35/$ amidst rising external reserves.
Nigeria’s gross external reserves climbed to $48.50 billion, reflecting an addition of $134.83 million day-on-day amidst uncertainties in the global commodity market.
Yesterday, the global Oil prices rose around 2% to settle at their highest level in six months, as traders worried about escalating tensions between the United States and Iran, which have stepped up military activity in the oil-producing Middle East.
Brent crude spiked 3.04% or $2.12, hovering around $71.89 per barrel, while U.S. West Texas Intermediate (WTI) soared 2.43%, to around $66.63 per barrel.
Similarly, Gold prices extended gains on Thursday after rising more than 2% in the previous session, as lingering tensions between the United States and Iran prompted a flight to safety, while investors evaluated the Federal Reserve’s monetary policy path.
Spot gold price rose 31bps to $4994.68/oz, while U.S. gold futures edged up by 8bps, hovering around $5,013.29/oz. AIICO analysts expect oil market to remain cautious amid lingering geopolitical tensions between Iran and the U.S. Safe-haven demand to trade in line with risk sentiment. CBN Allots OMO Bills Expiring in 8 Days to Investors
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