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Home»Business»Naira Gains Ground In Forward Market, Trading At ₦1,535
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Naira Gains Ground In Forward Market, Trading At ₦1,535

Moyosore RokosuBy Moyosore RokosuJanuary 6, 2025No Comments2 Mins Read
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The naira was pegged at ₦1,535 per US dollar in the Nigerian foreign exchange market (NFEM) on Friday, following the Central Bank of Nigeria’s (CBN) aggressive year-end FX sales to commercial banks, which boosted supply-side liquidity.

The CBN’s strong FX intervention sales to banks, which are a component of larger efforts to improve liquidity and stabilise the market, have kept the spot exchange rate comparatively steady within this range.

To further ensure exchange rate stability, the CBN extended temporary FX sales at the official rate to Bureau de Change (BDC) operators in the informal currency market.

Market Activity Overview

AIICO Capital Limited reported that FX transactions during the week were conducted between ₦1,520 and ₦1,550. Midweek trading saw heightened activity, with rates narrowing to ₦1,538–₦1,545. By the close of the week, strong liquidity levels kept rates within a tighter range of ₦1,531–₦1,540.

In the parallel market, however, the naira weakened by ₦15 against the US dollar, closing at ₦1,655 on Friday. This came despite authorities allowing BDC operators to purchase $25,000 at the official rate from banks. Consequently, the spread between the official and parallel market rates widened to 7.82%, up from 6.84% in the previous week, according to a report by TrustBanc Financial Group Limited.

Forward Market Gains

Forward market rates appreciated across various contracts, reflecting trader optimism about the CBN’s commitment to supporting the naira. Cordros Capital Limited reported the following:

  • 1-month forward contract: Appreciated by 0.3% to ₦1,573.93 per dollar.
  • 3-month forward contract: Increased by 0.5% to ₦1,631.60 per dollar.
  • 6-month forward contract: Rose by 0.9% to ₦1,711.77 per dollar.
  • 1-year forward contract: Gained 1.9% to ₦1,880.59 per dollar.

Foreign Reserves and Global Markets

Nigeria’s gross foreign reserves reached $40.884 billion last week, supported by expectations of additional inflows amid global economic uncertainties. Oil prices recorded weekly gains, driven by anticipated economic stimulus in China and easing U.S. interest rates. Brent crude rose to $76.51 per barrel, while the U.S. benchmark, West Texas Intermediate (WTI), traded at $73.96.

On the other hand, as markets prepared for possible changes in economic policy under U.S. President-elect Donald Trump, gold prices fell from a three-week high due to pressure from a rising dollar. The price of an ounce of gold was about $2,637.78.

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Moyosore Rokosu
Moyosore Rokosu is a graduate of Mass Communication. She is a passionate writer and a social media savvy with a flair for writing.
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Moyosore Rokosu

Moyosore Rokosu is a graduate of Mass Communication. She is a passionate writer and a social media savvy with a flair for writing.

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