The naira appreciated on the strength of external borrowing approval, FX intervention, and sustained increase in external reserves. Increased demand for foreign currencies in Nigeria has caused the naira to lose its allure. On Thursday, the one-sided exchange rate gain raised the gap between official and parallel market rates to N82.
The U.S. dollar supply is still somewhat constrained by the underperformance of the oil and gas sector, which is one of the major sources of foreign currency inflows in Nigeria.
The markets have braced for Eurobond issuance following the lawmaker’s approval of $2.2 billion in external borrowing for the Federal Government.
Finance Minister Wale Edun had hinted that the amount approved would be raised via Eurobonds and Sukuk. The gross balance in the external reserves rose above $40.22 billion due to inflows from various sources.
The Central Bank of Nigeria (CBN) continues to grow external reserves by reducing FX intervention sales to banks. In Oct, FX auctions sold to banks were 30% below the US dollar volume used to defend the local currency in September.
Spot data from the FMDQ platform showed that the naira appreciated by 1.71%, closing at N1,658.67 per US dollar at the official market. In the parallel market, the naira steadied at N1,740 to the greenback as pressures on supply eased.
Oil prices climbed as Russia and Ukraine exchanged missile attacks, overshadowing a larger-than-expected rise in U.S. crude supplies.
Brent crude increased to $74.03 per barrel, and WTI reached approximately $69.95. Meanwhile, spot gold rose for the fourth straight session, reaching its highest level in over a week.
This surge was driven by safe-haven demand due to Nvidia’s disappointing revenue outlook and growing tensions between Russia and Ukraine, with gold priced at about $2,672 per ounce.
SOURCE: BizWatchNigeria.Ng