Naira Sinks Deep as FX Liquidity Challenge Persists
Untamed demand for foreign currencies shadowed purchasing power of the Nigerian naira, gasping for strength after 40% year-to-date depreciation in the forex market.
Across foreign exchange market, the naira failed to recalibrate despite Nigeria’s growing external reserves. According to FX spot rate data from the FMDQ platform, the local currency weakened against the US dollar by 0.25%, closing at ₦1,508.99 per US dollar.
Exchange rates have continued to worsen, even with successive US dollar inflows into the nation’s foreign reserves. Nigeria’s gross external reserves climbed to about $34.2 billion at the end of June, 2024.
Analysts said due to the Central Bank of Nigeria (CBN) willing seller, willing buyer FX model, exchange rates gap has closed significantly in the year.
The apex bank has left the market to determine spot rates without influencing the supply or demand side. This cause the naira to lost 40% of its market value in the first half of the year. The CBN has however maintained stance that the authority has no intention to defend the local currency in the official window.
At the parallel market, the Naira closed at N1,505 per US dollar as invisible FX demand continues to outpaced the volume availability amidst halted subsidised FX sales to currency traders in the informal market.
In the global commodity market, crude oil prices recorded increases due to tight supply outlook and weak US dollar. Brent crude rose by 0.32% to $85.28 per barrel, and WTI crude advanced by 0.35% to reach $81.83 per barrel. #Naira Sinks Deep as FX Liquidity Challenge Persists Naira Steadies as Banks Issue Update on FX Purchase
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