Naira Trades Near N1483, Parallel Market Rate Worsens

The Nigerian local currency, the naira, registered a marginal gain against the US dollar in the forex market on Friday as FX scarcity pressures eased. According to information gathered from the FMDQ platform, the Nigerian Naira appreciated by 0.19% against the US dollar in the official window, closing at a rate of ₦1,482.81.

The Central Bank of Nigeria’s (CBN) FX reserves recorded a further accretion this week, as the gross reserves level increased by US$73.05 million to US$32.74 billion.  Analysts attribute the weak naira to sustained FX liquidity scarcity in the official and parallel markets.

The decision to use the willing sellers and willing buyers foreign exchange model sent the naira into a fatal downward spiral, and the apex bank has reduced its market intervention. >>> Interest Rate on Nigerian Treasury Bill Spikes to 21.45%

Due to weak foreign exchange reserves and modest inflows from foreign portfolio investors (FPIs), which caused currency volatility in the FX market, Apex Bank shifted from intervening in the FX market. There is also an expectation that the naira will rebound strongly on expected Eurobond issuance in June, in addition to multilateral financing from the World Bank.

“If these come in and improve system liquidity, we could see the naira strengthen”, Cordros Capital analysts said in a note. At the parallel market, the exchange rate plunged by 0.40%, ending the week at an average of N1,489 per US  dollar.

US crude benchmark, West Texas Intermediate, crude futures and Brent crude prices were at $77 and $81 per barrel amidst uncertainties in the global commodity market. #Naira Trades Near N1483, Parallel Market Rate Worsens
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