The naira rose against the US dollar in the foreign currency (FX) markets, causing the difference between official and parallel market rates to narrow dramatically.
The naira increased by 0.59% and closed at ₦1,659.26 per US dollar in the official market, according to FX spot data from the FMDQ website. Yesterday, the local currency fell sharply in the official window, losing 8.5% to close at N1,669.15 per USD.
Even while the nation’s foreign reserves are technically robust enough to weather the storm, the US dollar shortage continues to be a drag on exchange rate recovery.
However, analysts noted that a large portion of the entire balance of $38 billion in foreign reserves has been committed, implying that the genuine balance is far lower.
In the black market, exchange rate recovered, the same pattern observed in the official foreign currency market on Thursday. The market wide appreciation of the naira reduced FX gap significantly.
Channel check showed that the Naira closed at ₦1,665 to the US dollar in the parallel market today, from N1684 per greenback on Wednesday.
With official rate at N1659 and parallel market rate of N1665, FX gap has collapsed to N6 on each US dollar, thus reducing speculative activities in the currency markets.
This was in contrast to the official rate of N1665 versus N1684 per US dollar exchange rate in the parallel market on Wednesday; which left FX spread at N19 on each greenback.
Today, oil prices went up and are set for a third consecutive session of increases due to concerns that Israel might target Iran’s oil industry in response to Tehran’s recent ballistic missile strike.
Brent rose by 4.91% to $77.50, while WTI prices had gone up by 5.18% to $73.73. On the other hand, gold prices dropped due to a stronger dollar as investors lowered their expectations of a significant interest-rate cut from the U.S. Federal Reserve.
The market is now awaiting Friday’s payroll data for more insights into future policies. Currently, gold is trading at $2,680.30 per ounce.
