In an effort to regain traction following the devaluation, the Naira rose modestly versus the US dollar on Tuesday, trading at N791.42 at the Investors and Exporters market. Exchnage was triggered by FX reform in June 2023.
Foreign money inflows into the nation are now falling short of market forecasts. The naira is projected to improve, but the US dollar’s depreciation remains a risk to a strong exchange rate gain.
According to FMDQ statistics, the local currency gained 0.08 percent when compared to the N792.04 it traded for the dollar on Monday. The top bank’s interest rate boost at the recently finished monetary policy committee meeting aided the currency’s rebound.
The benchmark rate was raised by 25 basis points to 18.75%. The open indicative rate ended at N779.50 to the dollar on Tuesday, according to FX market data, while foreign reserves fell below $34 billion earlier in the week.
Traders reported the highest spot exchange rate recorded throughout the day’s trade was N845 to the dollar before it ended at N791.42. During the day’s trade, the naira fell as low as N730 to the dollar.
According to market statistics, 51.55 million US dollars were exchanged in the investors and exporters window on Tuesday. Traders claimed demand pressures have eased as the market displayed mixed feelings about the bank’s operations.
In the parallel market, the Naira continued its southward, depreciating by 1.16% to N875 (from N865) against the US dollar amidst a crude oil market rally. Brent crude rose 1.42% to $82.22 per barrel, while WTI crude gained 1.64% to $78.34 per barrel.
Oil futures were higher on Monday as supply constraints coupled with expected Chinese economic stimulus outweighed demand concerns ahead of expected policy rate hikes by major Central bankers.
Elsewhere, gold was hovering around $1,960 per ounce (-0.01%), as traders geared up for a 25 basis point policy rate hike by the US Fed Reserve.
