IN an effort to gain traction after the devaluation, the Naira on Tuesday appreciated marginally against the United States (US) dollar, exchanging at N791.42 at the Investors and Exporters window. Exchnage was spooked as a result of FX reform in June 2023.
At the moment, foreign currency inflows into the country are below market expectations. Naira is expected to recover but the shoratage of the US dollar has remained a downside for a solid exchange rate rally.
FMDQ data showed that the local currency gained by 0.08 percent when compared with N792.04, which it exchanged for the dollar on Monday. The recovery in the exchange rate was supported by the apex bank interest arte .hike at the just concluded monetary policy committee meeting.
The benchmark interest rate was adjusted 25 basis points to 18.75%. According to FX market records, the open indicative rate closed at N779.50 to the dollar on Tuesday – while external reserves plunged below $34 billion earlier in the week.
Traders said a spot exchange rate of N845 to the dollar was the highest rate recorded within the day’s trading before it settled at N791.42. The naira sold for as low as N730 to the dollar within the day’s trading.
Market data revealed that a total of 51.55 million US dollars was traded at the investors and exporters window on Tuesday. Traders said demand pressures declined as the market expressed different views about the operation of the bank.
In the parallel market, the Naira continued its southward, depreciating by 1.16% to N875 (from N865) against the US dollar amidst a crude oil market rally. Brent crude rose 1.42% to $82.22 per barrel, while WTI crude gained 1.64% to $78.34 per barrel.
Oil futures were higher on Monday as supply constraints coupled with expected Chinese economic stimulus outweighed demand concerns ahead of expected policy rate hikes by major Central bankers.
Elsewhere, gold was hovering around $1,960 per ounce (-0.01%), as traders geared up for a 25 basis point policy rate hike by the US Fed Reserve.
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