Naira loses 3% as market discounts CBN FX auction

The Naira lost 3% on Friday, pulling back from gaining streaks against the US dollar in the forex market as exchange rate rubbished FX market intervention.

The Central Bank of Nigeria (CBN) sold $39 million to authorised dealer banks to boost liquidity level in the forex market yesterday, helping the naira recalibration.

The process for price discovery has been messed up due to tight FX liquidity in the official window, and by extension, US dollar scarcity in the informal currency market.

In the official FX market, naira depreciated by 3.00%, closing at ₦1,617.08 per US dollar as demand for foreign currency eclipsed the supply side.

The naira closed at N1,570 per greenback in the official window on Thursday, the same amount the CBN sold to banks at the FX auction sales.

In the informal currency market, or the black market space, exchange rate remained depressed, with outlook skewed to negative since apex bank sustain its intermittent US dollar sales to bureau de change operators.

According to channel check, the naira for US dollar exchange rates was quoted ₦1,595, down by N5 day on day due to a weaker FX supply in the informal currency market.

Brent crude fell by 3.24% to $76.95 per barrel, and West Texas Intermediate (WTI) crude decreased by 3.57% to $73.59 per barrel on Friday at the global commodity market.

Analysts said the decline marks the lowest level for WTI in two months, extending the losses from the previous session.

The drop in prices is attributed to global oil demand concerns outweighing supply risks amid rising geopolitical tensions in the Middle East.