The naira strengthened in the Nigerian Autonomous Foreign Exchange Market (NAFEM) as demand pressures moved to the electronic trading platform BMatch, where authorized dealer banks facilitated USD-NGN transactions along with other currency pairs.
Analysts noted that the platform being utilised currently affects the currency rates for foreign payments. As demand for the US dollar decreased on Wednesday, the value of the naira rose in the NAFEM. According to data from the FMDQ website, the naira appreciated by 0.88%, closing at ₦1,525 to the US dollar on the official market. According to AIICO Capital Limited, the naira concluded the day trading firmer despite some early-session volatility, with transactions taking place between ₦1,500 and ₦1,560.
Conversely, the naira weakened by 0.6% to ₦1,549.80 per dollar on the Electronic Foreign Exchange Matching System (EFEMS), even amid robust FX liquidity in the market. Foreign portfolio investors contributed another wave of FX inflows into the financial system, raising demand for Nigerian OMO bills, where ₦1.56 trillion worth of securities were sold to local and offshore investors.
Exchange Rate Dynamics and External Reserves
The naira experienced slight depreciation at the start of the week in the official market, halting a previous strong rally sparked by the launch of automated FX trading. Meanwhile, in the parallel market, the dollar was sold to informal FX users at ₦1,595 due to heightened demand pressures.
Market observers anticipated that exchange rates in the informal currency market would continue to appreciate, driven by evolving developments in the forex market. Central Bank of Nigeria (CBN) data revealed that the nation’s external reserves rose to $40.376 billion, even amid uncertainties in the global oil market.
Remittances and Commodities Update
Nigerian diaspora remittances have increased ahead of the festive season, while import activities have slowed. In the global commodities market, oil prices remained stable as concerns over potential geopolitical fallout in Syria subsided. Brent crude was priced at approximately $72.41 per barrel, and West Texas Intermediate (WTI) stood at $68.76 as of Tuesday.
On the other hand, increased global concerns and anticipation of a third interest rate decrease by the US Federal Reserve caused gold prices to surge to a two-week high. The rising demand for safe-haven assets was reflected in the price of gold, which was trading at roughly $2,691.99 per ounce.
