Naira strengthens against US dollar in FX market

The Nigerian naira strengthened against the US dollar in the foreign currency market on Monday, according to data obtained from the FMDQ Exchange platform.

Details showed that the naira appreciated by 0.04%, settling at ₦1,579.22 per US dollar at the Nigerian autonomous foreign exchange market on Monday on the back of relatively stable demand and supply of hard currencies.

The authority is working to boost US dollar inflows into the economy. Today, Debt Management Office launched its $500 million domestic US dollar bonds, targeting retails investors in the economy with 9.75% coupon rate.

The move becomes necessary as foreign currency shortage weakened the naira price discovery process in the FX market.

While the balance in Nigeria’s external reserves steady above $36.5 billion, a significant part of the amount has been pledged, reducing the Central Bank’s war chest to defend the local currency.

Latest data on movement of the nation’s external reserves revealed that there have been successive outflows of funds. Last week, the foreign reserves fell by more than $300 million.

This happened after the apex bank use more than $820 million to buy the local currency from authorised dealer banks at its first in a long time retail Dutch auction system.

The CBN Dutch auction calendar has not been released, signifying the move to back the naira in the forex market will be intermittent.

Meanwhile, the naira closed at an average of ₦1,580 per US dollar due to steady demand from invisible FX users in the informal currency market.

In the global commodity market, Brent crude fell by 0.68% to $79.14 per barrel, and West Texas Intermediate (WTI) crude dropped by 0.61% to $76.19 per barrel.