Naira appreciates slightly as FX liquidity shortage eased

The naira exchange rate improved slightly in the forex market amidst rumour, expectation that the Central Bank of Nigeria (CBN) may not resume retail Dutch auctions again.

Spot data from the FMDQ platform showed that the Naira appreciated by 0.16%, closing at ₦1,622.57 per US dollar at the official market. In the Parallel market, the Naira closed at ₦1,675 to the US dollar.

Demand for foreign currency continues to overshadow FX liquidity, leaping exchange rate movement tight across the markets. The gap between official and parallel market rates had crossed N120 in the recent past until Central Bank of Nigeria FX intervention.

The Apex Bank may have known that there is more to its desired willing buyer, willing seller guideline in a country that depends heavily on imports. With about 90% dependence on hydrocarbons to generate FX receipts, analysts believe Nigeria must do more to increase exportation of value products that meet international standards.

“Country with strong FX receipt, and home growth would have a strong local currency”, LSintelligence Associates said in a chat.

In the global commodities market, oil prices rose over 3% due to increased U.S. fuel consumption, Middle East supply concerns, and potential growth in energy demand from the U.S. and China.

Brent prices surged to $79.62, and US benchmark WTI prices to $76.14. In addition, gold prices rose after traders bet on a potential Federal Reserve interest-rate cut, reaching $2,642.70 per ounce.