FX Crisis: CBN defends Naira with $66m
By Seun Ibiyemi
The Central Bank of Nigeria (CBN) intervened in the foreign exchange market with the sales of $66 million to authorised dealer banks.
Due to supply side shortfall, the naira has been under pressures for two weeks after a full week rally.
The forex market volatility caused exchange rate to swing negative for 8 out of 10 trading sessions. At the close of last week, the Naira lost ₦8.09 to close at $/₦1,509.70 in the official market despite FX intervention sales by the CBN to boost inflows.
The Nigerian Foreign Exchange Market (NFEM) remained under sustained demand pressure throughout the week, with limited supply driving a predominantly bid market.
Early last week, FX trades ranged between $/₦1,480.00 and $/₦1,515.00, but demand pushed rates higher, with transactions later occurring between $/₦1,500.00 and $/₦1,513, AIICO Capital Limited said in a report.
However, improved dollar liquidity was observed towards the end of the week as the Central Bank intervened in the fx market to ease demand pressure.
As a result, trades on Friday ranged between $/₦1,480.64 and $/₦1,522.00, providing some relief to the market.
In the parallel market, the naira appreciated by N5 to close the week at N1565 per US dollar.
The exchange rates movement caused a move near FX convergence. Review of the FX rates showed that the spread between the official and parallel market narrowed to 3.33% from 4.22% the previous week.
The CBN sold $66.45 million at range of $/₦1,497- $/₦1,503 to banks to boost US dollar amount in the official window. But analysts noted that the intervention has continue to impacts foreign reserves.
Latest data showed that the nation’s gross external reserves balance dropped to $39.10 billion amidst volatility in the global commodity market. Elsewhere, Oil prices increased on expectations that U.S. reciprocal tariffs won’t take effect until April, offering a reprieve from potential trade conflicts.
Brent futures rose by 0.49% to $75.39 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.34%, reaching $71.53.
Also, gold prices dropped over 1% due to profit-taking but remained poised for their seventh consecutive weekly rise, driven by trade war concerns, with spot gold at $2,892.59 an ounce.
Analysts anticipate that increases in oil prices might appear restricted as market players need to absorb the possibility of Russian supplies returning to the market, considering potential peace discussions between Ukraine and Russia.
