February 22, 2025
The naira appreciated against the US dollar rising to N1501/$ in the official foreign exchange market, courtesy of Central Bank continuous support.
The gain as posted in FX market was driven by increased foreign exchange supply from foreign portfolio investors, FPIs, international oil companies, IOCs and the Central Bank of Nigeria’s market interventions, analyst, said in a note.
As monitored on Marketforces Africa, the rise in dollar liquidity helped ease FX demand pressure. Leading to a robust trading activity with transactions occurring within the range of $/₦1,490.00 to $/₦1,520.00
The CBN’s foreign exchange sales to banks, which totalled $181.25 million during the week strengthened the total volume of US dollars in supply side, helping the naira to survive persistent demand for foreign currency.
READ MORE; Naira Appreciates In Parallel Market
According to FX data obtained, the naira appreciated by 0.6% to N1,501.08 per greenback at the Nigerian Foreign Exchange Market, NFEM, on Friday due to CBN intervention, selling USD66.80 million to authorised dealers.
However, according to data from the CBN, the external reserve have continue to decline week on week, due to successive but less aggressive FX auction sales to authorised dealer banks.
The gross external reserves level declined by USD300.11 million to USD38.74 billion at the last look on Friday, marking the 6th consecutive week of decline. In the forwards market, the naira rates increased across contracts, according to Cordros Capital Limited.
FX forward contract for 1-month appreciated by 0.8% to N1,541.90 per dollar, and the 3-month contract rose by +1.2% to N1,614.50. Also, the 6-month FX forward contract climbed by +2.0% to N1,715.15 and 1-year rose by +2.2% to N1,906.24.
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In line with the CBN’s efforts to sustain carry trade opportunities and boost capital inflows, coupled with its ongoing market interventions, analysts said they expect FX liquidity to remain adequate, supporting naira stability in the short term.
The FMDQ FX rate depreciated by 0.47% to N1,501.08/USD, while the parallel market rate remained flat at N1,510.00 US dollar, Investment banking firm CardinalStone Limited said.
This has reduced the exchange rate gap to N9, reducing opportunities for speculative trading in the forex market
