The naira gained ground in the Nigerian Autonomous Foreign Exchange Market (NAFEM) as demand pressures shifted to the electronic trading platform BMatch, where authorized dealer banks facilitated USD-NGN trades among other currency pairs.
Analysts observed that exchange rates for international payments now vary depending on the platform used. On Wednesday, the naira strengthened in the NAFEM as demand for the US dollar eased. Data from the FMDQ platform indicated a 0.88% appreciation in the naira, closing at ₦1,525 per US dollar in the official market. Despite some early-session fluctuations, the naira ended trading stronger, with transactions occurring between ₦1,500 and ₦1,560, according to AIICO Capital Limited.
Conversely, the naira weakened by 0.6% to ₦1,549.80 per dollar on the Electronic Foreign Exchange Matching System (EFEMS), even amid robust FX liquidity in the market. Foreign portfolio investors contributed another wave of FX inflows into the financial system, raising demand for Nigerian OMO bills, where ₦1.56 trillion worth of securities were sold to local and offshore investors.
Exchange Rate Dynamics and External Reserves
The naira experienced slight depreciation at the start of the week in the official market, halting a previous strong rally sparked by the launch of automated FX trading. Meanwhile, in the parallel market, the dollar was sold to informal FX users at ₦1,595 due to heightened demand pressures.
Market observers anticipated that exchange rates in the informal currency market would continue to appreciate, driven by evolving developments in the forex market. Central Bank of Nigeria (CBN) data revealed that the nation’s external reserves rose to $40.376 billion, even amid uncertainties in the global oil market.
Remittances and Commodities Update
Nigerian diaspora remittances have increased ahead of the festive season, while import activities have slowed. In the global commodities market, oil prices remained stable as concerns over potential geopolitical fallout in Syria subsided. Brent crude was priced at approximately $72.41 per barrel, and West Texas Intermediate (WTI) stood at $68.76 as of Tuesday.
In contrast, gold prices climbed to a two-week high, driven by heightened geopolitical tensions and expectations of a third interest rate cut by the U.S. Federal Reserve. Gold traded at about $2,691.99 per ounce, reflecting increased demand for safe-haven assets.
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