The naira traded at ₦1,535 per US dollar in the Nigerian foreign exchange market (NFEM) on Friday, following aggressive year-end FX sales by the Central Bank of Nigeria (CBN) to commercial banks, which boosted liquidity on the supply side.
The spot exchange rate has remained relatively stable within this range as the CBN continues its robust FX intervention sales to banks. These interventions are part of broader efforts to enhance liquidity and stabilize the market.
To further ensure exchange rate stability, the CBN extended temporary FX sales at the official rate to Bureau de Change (BDC) operators in the informal currency market.
Market Activity Overview
AIICO Capital Limited reported that FX transactions during the week were conducted between ₦1,520 and ₦1,550. Midweek trading saw heightened activity, with rates narrowing to ₦1,538–₦1,545. By the close of the week, strong liquidity levels kept rates within a tighter range of ₦1,531–₦1,540.
In the parallel market, however, the naira weakened by ₦15 against the US dollar, closing at ₦1,655 on Friday. This came despite authorities allowing BDC operators to purchase $25,000 at the official rate from banks. Consequently, the spread between the official and parallel market rates widened to 7.82%, up from 6.84% in the previous week, according to a report by TrustBanc Financial Group Limited.
Forward Market Gains
Forward market rates appreciated across various contracts, reflecting trader optimism about the CBN’s commitment to supporting the naira. Cordros Capital Limited reported the following:
- 1-month forward contract: Appreciated by 0.3% to ₦1,573.93 per dollar.
- 3-month forward contract: Increased by 0.5% to ₦1,631.60 per dollar.
- 6-month forward contract: Rose by 0.9% to ₦1,711.77 per dollar.
- 1-year forward contract: Gained 1.9% to ₦1,880.59 per dollar.
Foreign Reserves and Global Markets
Nigeria’s gross foreign reserves reached $40.884 billion last week, supported by expectations of additional inflows amid global economic uncertainties. Oil prices recorded weekly gains, driven by anticipated economic stimulus in China and easing U.S. interest rates. Brent crude rose to $76.51 per barrel, while the U.S. benchmark, West Texas Intermediate (WTI), traded at $73.96.
In contrast, gold prices retreated from a three-week high, pressured by a strengthening dollar as markets braced for potential economic policy shifts under U.S. President-elect Donald Trump. Gold was priced at approximately $2,637.78 per ounce.
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