The naira strengthened against the US dollar in the foreign exchange (FX) market as increased liquidity in the currency market outweighed demand pressures. According to spot FX data from the FMDQ platform, the naira appreciated by 3.20%, closing at ₦1,601.20 per dollar in the official market.
This notable daily improvement in the exchange rate is largely attributed to a slowdown in FX demand from importers ahead of seasonal transactions. While the recalibration of the exchange rate has been sporadic, some analysts remain optimistic about the naira’s performance going into 2024.
Despite the naira’s recent depreciation, Nigeria’s monetary authorities have been steadily increasing external reserves. Data from the Central Bank of Nigeria (CBN) showed that the country’s gross external reserves rose to $39.20 billion this week, marking the highest level in 28 months. The last time reserves reached this level was in July 2022, when they stood at $39.219 billion. This increase in FX inflows has been driven by continued investments from foreign portfolio investors.
In the parallel market, the naira also gained ₦6, settling at ₦1,739 per dollar as demand pressures in the informal market subsided.
Meanwhile, in the commodities market, crude oil prices dipped by 1%, reflecting heightened volatility. Concerns about sluggish economic growth in Europe are weighing on energy demand. Brent crude traded at around $74.22, while WTI dropped to $70.01.
Gold, on the other hand, saw a 1% increase, with prices rising to $2,747.80 per ounce, approaching record highs. This surge is driven by strong safe-haven demand amid ongoing geopolitical tensions and uncertainty, particularly with the upcoming U.S. presidential election.
