The naira rose by around 5% against the US dollar in the foreign currency market as FX liquidity pressures eased. According to spot data from the FMDQ platform, the local currency rose 4.49% to close at N1,561.76 per US dollar in the official market.
The rally, which was one-sided between the official and parallel markets, caused the FX spread to surge significantly. According to a channel check, the naira finished at ₦1,684 per US dollar in the parallel market.
At current trading spot rates, the exchange rate spread has increased to N123, providing incentives for speculative wagers. The Nigerian autonomous foreign exchange (NAFEM) market saw increased volatility in September 2024 as a result of restricted foreign exchange supply and increasing corporate demand.
Exchange rates fluctuated between N1,500 and N1,699, AIICO Capital Limited said in a report. The Central Bank of Nigeria (CBN) intervened several times, injecting an estimated $544 million, which helped stabilize rates.
Thus, the Naira appreciated by 3.54% month on month, with the NAFEX fixing rate closing at $/₦1,541.94, with improved dollar liquidity in the market. FX turnover was 17.34% above August record, reflecting a monthly increase of $706.16 million, the investment firm stated.
However, the parallel market saw a 4.01% month on month depreciation, according to AIICO Capital Limited, with rates closing at $/₦1,687.50. On a positive note, Nigeria’s gross foreign exchange reserves grew by 5.64%, adding $2.05 billion to reach $38.35 billion in Sept,
Overall, the market remained pressured, but liquidity showed signs of recovery. Keeping interest rate high is part of the CBN’s efforts to manage exchange rate volatility as the fiscal side continue borrowing spree, analysts said.
Elsewhere, Oil dropped by over 4%, pausing the rally driven by increased geopolitical risk as the market awaited Israel’s response to Iran. Brent prices fell by 4.03% to $77.67, while WTI prices decreased by 3.99% to $74.06.
