Naira Depreciates to N1,660, Markets Anticipate FX Auction

The Nigerian naira plunged further to around N1,660 per US dollar due to sustained shortage of foreign currency in the market. While external reserves continue to rise, the naira has continued to lose weight as demand outpaces FX supply.

Data from the Apex Bank showed external reserves climbed to $38.798 billion on Monday due to sustained inflows from various sources including remittances. Even with the relatively huge amount, forex market intervention has been relatively weak to upturn naira fortune. 

In the foreign exchange market, the naira depreciated by 0.04%, closing at ₦1,659.69 per US dollar at the official market, spot data from FMDQ platform confirmed.

Analysts said the exchange rate will likely appreciate on Thursday and Friday on expectation that the Central Bank of Nigeria (CBN) would conduct FX sales to boost liquidity in the official market.

“Exchange rate has gotten to a level where the CBN will have no choice but to sell US dollars at a lower rate to reduce pressures in the official market.

“It is like the FX market has been programmed not to cross this level, the resistance level, and if it breaches this level, the naira may be heading to another red range”, analysts said in a chat with MarketForces Africa.

In the parallel market, the Naira closed at ₦1,685 to the dollar. Effectively the FX gap between the official and parallel market rates has collapsed again.

Speculators’ FX spread incentive is still high, analysts said, noting that N25 gap between official and parallel market rates could increase speculative bets in the forex markets.

In the global commodities market, reports that Israel will not launch an attack on Iran’s oil facilities led to a slight decline in oil prices. Brent prices fell by 0.01% to $74.25, while WTI dropped by 0.22% to $70.23.

Elsewhere, gold prices surged to near-record highs due to increased non-yielding bullion, supported by weakening U.S. bond yields and anticipated interest rate reductions by major central banks. Ongoing geopolitical tensions also provided additional safe-haven appeal. Gold reached $2,691.50 per ounce. #Naira Depreciates to N1,660, Markets Anticipate FX Auction

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