The Nigerian naira fell further to roughly N1,660 per US dollar due to a persistent lack of foreign cash in the market. While foreign reserves continue to build, the naira has lost value as demand exceeds FX supply.
According to Apex Bank data, external reserves increased to $38.798 billion on Monday as a result of steady inflows from different sources, including remittances. Despite the large sum, currency market intervention has been insufficient to reverse the naira’s fortunes.
The naira fell by 0.04% and closed at ₦1,659.69 per US dollar on the official market, according to spot data from the FMDQ website. Analysts said the exchange rate will likely appreciate on Thursday and Friday on expectation that the Central Bank of Nigeria (CBN) will conduct FX sales to boost liquidity in the official market.
“The 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 the 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.