Tuesday saw a rise in the value of the naira on the Nigerian independent foreign currency market as pressure from the strong US dollar became less significant for local importers and producers.
At the official market, the local currency made significant gains versus the US dollar, rising by 3.71% to settle at N806.73 from N837.77 the day before.
Analysts predict that December will see a decrease in market FX tension due to lower import costs. Before the 2024 plan, several manufacturers would have begun to tighten their belts by reducing their manufacturing activity, experts told MarketForces Africa.
The gross external reserve of the Central Bank of Nigeria (CBN) fell, moving below $33 billion and offering seven months’ worth of import protection as opposed to the guideline of three months.
Details showed that FX claims that reduced the balance in the nation’s foreign reserves were settled in the first week in December 2023.
The CBN recently offset FX forward backlog to support the naira while it hands off its periodical market intervention for six weeks straight. Nigeria plans to resume foreign currency borrowings with support from lawmakers.
Eurobond borrowing has been paused since March due to increased costs of issuance following US Fed rate hike targeted to stem inflation pressures. In the parallel market, the Naira saw further demand pressure as it depreciated by 0.52% to N1,165 per dollar.
Elsewhere, oil prices experienced a positive trend on Tuesday, with Brent Crude trading at $78.9 per barrel and WTI at $73.80 per barrel
