March 24, 20250
The naira lost about N19 against the US dollar as demand for foreign currencies continue to soar leading to a fall of the local currency at the official window due to insufficient US dollar supply to meet total demand logged in the forex market.
Exchange rates weakened by N18.95, closing the week at N1,536.89 despite the fact the Central Bank of Nigeria, CBN, was in the market for seven consecutive sessions.
As reported on Marketforces Africa, the CBN sold $92.10 million as the week ran down, bringing the total FX sales to $230.90 million amidst external reserves fluctuation. According to data from the CBN, the nation’s gross external reserves tracked behind $38.4 billion,
However, experts have said a sustained high interest rate environment is the only guarantee that the naira will continue to trade in the exiting range as FX accretion depends on foreign portfolio investors interest in Nigerian markets.
READ MORE; Naira Struggles As US Dollar Demand Surges
The naira depreciated last week due to high demand, closing at N1,528.03 per US dollar at the beginning of trading session and later settling higher at N1,532.93 per US dollar.
The CBN’s dollar sales of $38.65 million by midweek helped stabilise the exchange rate, leading to a slight appreciation to N1,530.52.
Further interventions totalling $92.1 million provided additional support, keeping the naira relatively stable at N1,530.62. However, by week’s end, the naira depreciated by 1.249% week on week, closing at N1,536.89, with trades ranging between N1,535 and N1,540.
At the end of last week, CBN sold a total of $230.85 million to authorised dealers to help manage sustained exchange rate volatility. Meanwhile, gross FX reserves decreased this week by $2.65 million to USD 38.36 billion.
READ MORE; Naira Falls as FX Pressure Mounts Across Currencies Markets
FX forward contracts were mixed this week, The naira rates increased across the 1-month fx forward contract +0.1% to N1,5780.82 to US dollar. The 3-month fx forward contract rose by +0.1% to N1,655.95.
Meanwhile, the 6-month FX forward contract dipped by -0.2% to N1,768.61, and the 1-year contract fell by -1.1% to NGN1,989.81 per US dollar. While market demand pressures have eased, near-term risks to naira volatility persist, Cordros Capital Limited told investors in an emailed note on Friday.
Market watchers noted that foreign portfolio investment (FPI) participation in the FX market remains subdued, partly due to concerns over oil receipts amid lower oil prices.
However, the potential for a surge in market demand looms, driven by the Dangote Refinery’s shift to selling petroleum products in U.S. dollars instead of naira following the expiration of the crude-for-naira deal.
Oil prices remained stable on Friday, poised for a second straight weekly gain as new U.S. sanctions on Iran and OPEC+’s latest production plans fuelled expectations of tighter supply. Brent crude futures inched up 8 cents, or 0.1%, to $72.08 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 18 cents, or 0.3%, to $68.25.
