The naira closed nearly unchanged on Monday in the official Nigerian Foreign Exchange Market (NFEM) after the Central Bank of Nigeria (CBN) intervened with a $86.6 million sale last week. This injection helped relieve demand pressures in the market, with the local currency losing only N1.16 or 0.07 percent, closing at N1,548.52 per dollar compared to Friday’s N1,547.36.
In contrast, the parallel (black) market saw a slight improvement for the naira, which appreciated by N5 to trade at N1,595 per dollar, up from N1,600 on Friday. This shift indicates a temporary easing of dollar scarcity among informal traders and hints at improving liquidity across different FX channels.
Total FX inflows into Nigeria last week amounted to $1.03 billion, driven primarily by foreign portfolio investors (FPIs), who contributed 67.29 percent. This marks the fifth consecutive week FPIs have dominated inflows, signaling their sustained confidence in Nigeria’s fixed-income assets. Exporters and non-bank corporates contributed 10.87 and 13.36 percent respectively.
Despite this, the naira’s performance remained mixed across different markets. While it appreciated by N1.99 at the official NAFEM market, it weakened by 0.31 percent in the black market, closing at N1,605 per dollar. Analysts noted the growing divergence between the two rates as a potential sign of underlying structural issues in Nigeria’s FX market.
Gross external reserves also declined during the week, falling by $219.56 million to $37.71 billion. Analysts expect the naira to trade within a narrow band in the short term, with modest gains possible if foreign inflows continue. However, persistent demand pressures and discrepancies between markets may pose risks to stability.
Source: Business Day