The naira strengthened by ₦16 last week, closing at ₦1,531.20 per dollar in the official foreign exchange (FX) market. This gain was driven by increased dollar supply from the Central Bank of Nigeria (CBN) and foreign investors, which helped meet the growing demand for foreign exchange......Read The Full Article>>.....Read The Full Article>>
According to reports, the market remained stable throughout the week, with the naira trading between ₦1,480.00 and ₦1,570.00 earlier in the week before settling at narrower rates by Friday. Increased supply from foreign portfolio investors (FPIs) further boosted the currency.
In the parallel market, the naira also gained ₦15, closing at ₦1,655 per dollar. However, the gap between the official and parallel markets widened slightly to 8.09% from 7.91% the previous week.
Central Bank’s Role
The CBN sold $113.85 million last week in its eighth consecutive intervention. These sales, aimed at stabilizing the naira, were made at rates between ₦1,549.55/$1 and ₦1,553.00/$1.
Forward contracts, which indicate future exchange rates, showed a decline:
1-month forward: ₦1,591.41 (-0.1%)
3-month forward: ₦1,667.93 (-0.8%)
6-month forward: ₦1,779.33 (-1.6%)
1-year forward: ₦1,962.32 (-1.4%)
Despite these interventions, Nigeria’s foreign reserves fell below $40 billion, ending the week at $39.99 billion due to external payments.
Outlook
Experts believe that while demand for FX will remain high, ongoing CBN interventions and improved market transparency through the new Electronic Foreign Exchange Matching System (EFEMS) will support naira stability in the short term.
Oil and Gold Markets Update
Oil Prices: After four weeks of gains, oil prices dipped slightly, with Brent crude closing at approximately $78.50 per barrel and West Texas Intermediate (WTI) at $74.66 per barrel. The decline followed U.S. efforts to increase domestic production and push for lower global oil prices.
Gold Prices: Gold rose by over 1%, nearing its October all-time high. A weakening dollar, impacted by U.S. policies on interest rates and tariffs, contributed to its fourth consecutive weekly gain.
Analysts warn that U.S. sanctions on key oil producers like Russia and Iran could disrupt global supply and lead to higher energy costs, countering efforts to reduce oil prices.