Naira Rises as Nigeria Receives $1bn FX Inflow

The Nigerian local currency, the Naira, appreciated after its recent offbeat moves across the foreign exchange (FX) markets amidst growing uncertainties in the local economy following 2023 election.

Demand for the United States (US) dollar pushed rates at the parallel market upward again following the apex bank’s weak market intervention and FX allowance rationing for businesses and personal travellers.

Despite the fact that the Central Bank of Nigeria (CBN) market intervention has reduced compared with the pre-pandemic level on account of FX illiquidity, external reserves nosedived for 10 weeks straight.

Signalling the fact that the FX crisis may have worsened beyond its capabilities, the CBN asked deposit money banks (CBN) to cut business and personal travelling allowance sales to customers by half.

Local banks also demand ample time for eligible US demand to be processed – saying, FX sales are subject to availability.

On Tuesday, there was accretion into Nigeria’s foreign reserves, boosting the balance above $36 billion following inflows from possible oil sales, and exports inflows.

At the Investors, and exporters’ FX window, the Naira appreciated against the dollar on Wednesday, exchanging at N461.24. This represented an increase of 0.11 per cent when compared to the N461.75 for which it exchanged to the dollar on Tuesday.

The open indicative rate closed at N461.50 to the dollar on Wednesday. An exchange rate of N462.13 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.24.

The Naira sold for as low as N459.50 to the dollar within the day’s trading. A total of 74.31 million dollars was traded at the official investors’ and exporters’ window.

At the parallel market, the Nigerian local currency depreciated by 0.40% to N747 (from N744), though oil prices increase in the global market. Trading data show that Brent crude rose 0.86% to $79.33 per barrel, while WTI crude gained 1.07% to $73.98 per barrel.

Oil prices rose on Wednesday, as supply constraints exceeded demand concerns, owing to a huge drawdown in US oil stockpiles from last week (-7.5 million barrels) as well as supply disruptions worth 400,000 bpd caused by an Iraqi-Kurdish government disagreement. # Naira Rises as Nigeria Receives Over $1bilion