Efforts of the Central Bank of Nigeria (CBN) are yielding results as the naira stabilised at N1600 at the foreign exchange (forex) market during the week.
Exchange rate volatility reduced in the week, thanks to the CBN’s sustained forex intervention sales to local banks and two times Open Market Operation (OMO) bill auctions at a higher rate to attract foreign investors.
This kept the rate stable, underpinned by healthy liquidity levels and a moderate increase in foreign exchange demand, analysts at AIICO Capital Limited said.
The US dollar – naira pair traded within a range of N1,580 to N1,603.50 during the session. By the close of trading, the Naira appreciated by 19 bps to settle at N1,596.68.
The exchange rate closed at N1601 in the parallel market as demand and supply leveled up. The spot FX data showed that gap between official and parallel market rates dropped to N10 per dollar. Analysts said CBN’s persistent interventions will likely keep the naira confined to its present trading band over the short-to-medium term.
In a surprise turn of an event, the external reserves climbed after successive outflows that plunged the gross balance below $38 billion amidst fluctuating oil prices—its lowest level seen in the last six months.
Oil prices declined on Wednesday, heading for their steepest monthly loss in over three years, as Saudi Arabia indicated plans to boost production and regain market share.
Concerns over slowing global fuel demand due to the ongoing trade war also pressured prices. Brent crude dropped $1.16, or 1.81 per cent , to $63.09 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.38, or 3.94 per cent , to $58.04.