The naira lost value in foreign exchange (FX) markets as a result of the US dollar’s low supply. The exchange rates went negative due to the economy’s FX scarcity difficulties.
According to spot data from the FMDQ platform, the naira declined by 4.06% and closed at ₦1,625.13 per US dollar. In the parallel market, the Naira closed at ₦1,670 to the US dollar due to strong FX demand for invisible payment.
Despite improvements in Nigeria’s oil production output, the dilemma of foreign currency scarcity has persisted. Despite global commodity market uncertainty, crude oil prices have not fallen below $60 per barrel, rather have edged closer to $90.
The latest data from the commodities market showed that oil prices decreased today after a significant drop in the previous session. Brent dipped to $76.57, while US benchmark WTI fell to $73.27 per barrel.
But data from the Central Bank of Nigeria (CBN) revealed that the external reserves continue its uptrend. The gross balance climbed to $38.670 billion on Tuesday due to twice inflows seen since last week.
On Friday, Nigerian autonomous foreign exchange market (NAFEM) rate traded within the range of N1,530- N1,699, closing at N1,631.2/US$ in the spot market. According to Coronation Research, the exchange rate movement points towards a depreciation of 5.9% or N90.4 week on week.
Analysts at Coronation Research explained that channel checks conducted revealed that in the parallel market, the Naira closed at an average of N1,688/US$ on Friday – leaving FX gap at 2.4%.
According to data from FMDQ, total NAFEM turnover increased by 10.6% or US$138 million week on week to close at US$1.4 billion. The official FX window recorded an inflow of USD645 million.
The CBN accounted for 23.3% of the total inflow, foreign portfolio investors (FPIs) contributed 14.2% while non-bank corporates supplied 20%. Also, exporters accounted for 28.7% of the inflows, and others accounted for 13.9%.
Additionally, gold prices retreated due to the strengthening dollar and reduced expectations for a more significant rate cut in November.
