The Nigerian naira rose 2.89% to N869.39 at the Nigeria Autonomous Foreign Exchange Market (NAFEM) as foreign reserves increased. FX demand lagged behind market supply, boosting the local currency.
Analysts anticipate that the currency would perform strongly in the first quarter of 2024, since the Central Bank of Nigeria (CBN) has stated its intention to balance the FX backlog with increased payments to international airlines.
on contrast, the Naira fell on the parallel market, ending at N1,238 per US dollar. Nigeria’s foreign exchange reserves began the year with a rise, with the gross reserve level increasing by USD129.82 million week on week to USD33.04 billion.
Total market volume fell by 56.0% to USD169.64 million on Thursday, with deals completed within the N700.00 – N1,268.00/USD band, according to Cordros Capital.
In the forward market, exchange rates across short-term contracts appreciated amidst hope that more FX inflows would be seen in 2024.
Forward rates on 1-month contracts appreciated by +7.5% to N907.02, 3-month contracts gained 7.0% to N929.47 and 6-month contract rose by 6.1% to N964.05. At the end, forward rate for 1-year contract gained 4.7% to N1,038.50.
In their market update, Cordros Capital analysts said they expect FX liquidity conditions to remain tight, pending receipt of expected FX inflows. Dangote Reacts to EFCC Visit to Headquarters
Analysts expect the pressure on the local currency to persist in the near term. Nonetheless, they expect foreign investors to keenly watch the development in the FX space.
In the global commodity market, West Texas Intermediate (WTI) crude futures advanced by 1.97% to $73.61 per barrel on Friday. Also, the Brent Crude closed higher at $78.87 per barrel.
