Exchange Rates Gap Jumps to N152 as Naira Gains at IE Window
Exchange Rates: The Nigerian naira appreciated to N738 per United States (US) dollar on Thursday at the Investors and Exporters (IE) window as pressures on foreign currencies demand eased for the second day in the week.
The strong daily gain came after a moderate slide in the US dollar index amidst a slowdown in the Federal Reserve’s fast and furious hawkish pose. At its US Fed Reserves kept fund rates steady but pointed to elevated interest rates, though it has been able to rein in consumer inflation.
Back home in Nigeria, the apex bank has notified about the decision to postpone its monetary policy committee meeting indefinitely. MarketForces Africa reported that past decision of the Central Bank has often mirrored the US Fed’s.
“Whenever the US hike rate, the CBN hikes rate and when it did otherwise, the local apex bank always follows suit”, a financial expert at Broadstreet told MarketForces Africa in a chat.
The monetary authority did not disclose the reason but analysts said this could be to allow the incoming Governor of the CBN to preside over the policy committee meeting, the second to the last in 2023.
Data from FMDQ showed that the Naira gained strength, appreciating against the US dollar by 4.24% to N738/$1 at the Investors and Exporters (I&E) windows as demand pressure cooled.
The exchange rate had settled at N770.71 the previous day as analysts rumoured that the apex bank made an attempt to support the naira amidst the widening FX gap. However, at the parallel market, the naira depreciated by 1.02% to a new low of N990 as demand pressures persisted while foreign currency inflows remained tight.
At the close of the trading session on Thursday, the gap between the parallel and official markets has inched to N152 on each US dollar held by currency speculators. Brent crude showed a rebound by 0.51% to $94.00 per barrel, while WTI crude reversed Wednesday’s losses by 1.20% to trade at $90.73 per barrel.
This comes after Russia announced a ban on fuel exports, raising further concerns about tight supplies. Meanwhile, official data showed that US crude inventories fell by 2.135 million barrels last week, and stocks at Cushing were at their lowest since July 2022.
In the bond market, trading activities were mixed, albeit with a bearish tilt, as the average yield expanded by a marginal 4 basis points to 14.46%. Selling activity was seen at the short end (+16bps) of the curve, with the MAR-2024 paper increasing by 72bps to close at 7.98%. The mid and long ends of the curve closed flat, traders said. #Exchange Rates Gap Jumps to N152 as Naira Gains at I&E Window