Naira weakened against the US dollar in the foreign exchange market despite the Central Bank of Nigeria ,CBN, FX supply to banks, amid declining external reserves.
The external reserve was at $38 billion, though the CBN claimed the net FX reserves for Nigeria is $23 billion, a sharp growth from 2023, a development supported by reforms.
Offshore investors rotating out from the naira assets in the financial markets triggered higher demand for the US dollar in the country in the last few weeks. This happened at the FX inflows from remittances and other foreign sources are at their lows.
The CBN FX rate was N1603 on Friday, according to data from the Nigerian Foreign Exchange Market ,NFEM. Despite these efforts, the Naira weakened by 2.346% w/w, closing at N1,603.78.
The NAFEX fixing mirrored this trend, fluctuating between N1,616.63 and N1,643.33. Trading activity was concentrated between N1,580 and N1,655, with the B-match platform recording highs of N1,665 and lows of N1,490.
The CBN intervened by selling about $634.85 million across multiple sessions, which temporarily eased volatility. CardinalStone Partners Limited estimated in a report that the current pace of FX sales by the CBN, the nation’s net FX reserves can cover for 32 months.
Oil prices rose sharply on Friday, with Brent and West Texas Intermediate ,WTI, crude gaining more than $1 following comments from U.S. Energy Secretary Chris Wright, who suggested that the U.S. might move to halt Iran’s oil exports in a bid to pressure the country over its nuclear ambitions.
Brent crude settled at $64.76 a barrel, up $1.43 or 2.26%, while WTI ended at $61.50, also gaining $1.43 or 2.38%. Meanwhile, gold soared past $3,200 an ounce as recession concerns mounted due to a deepening U.S.-China trade war and a weakening dollar.
Spot gold rose nearly 2% to $3,235.89 after hitting a record $3,245.28, with weekly gains exceeding 6%.
