Naira Gains 0.05% as FX Demand Steadies
The Nigerian naira was sold at N461.25 to the United States (US) dollar at the Investors and Exporters window, according to market data. Exchange rates in the market have been on negative swings as the US dollar strengthened against major currencies.
The figure represents a gain of 0.05 per cent compared with the N461.50 it exchanged on Tuesday. There appears to be caution in the Nigerian manufacturing sector ahead of February Presidential election, thus level of goods and service imports decline.
Purchasing Managers Index report indicates that worsening FX rates impacted production costs in December 2022. Surprisingly, Nigeria’s inflation rate slowed down in the same period by 13 basis points, according to data from the National Bureau of Statistics.
In their separate outlook, FX analysts projected a bleak outlook for the local currency, citing expected low foreign currencies inflows. Notably, the market will factor election risks into every economic decision, and as such international trading activities are projected to remain steady.
In the FX market for local importers and exporters, investment banking firm analysts said the naira will weaken to N500 – best case scenario – should the oil market position be favourable in addition to capital reversal.
The open indicative rate closed at N461 to the dollar on Wednesday. An exchange rate of N462 to the dollar was the highest rate recorded within the day’s trading before it settled at N461.25. >>>Naira Steadies as Banks Issue Update on FX Purchase
The naira sold for as low as 440 to the dollar within the day’s trading. A total of N55.54 million was traded at the official Investors and Exporters window on Wednesday.
Elsewhere, Nigeria’s external reserves printed at $37 billion, covering about 9 months of imports comfortably. There is also an expectation that gross external reserves will increase as oil price rebounds.
For now, Nigeria’s crude oil production level in the country is favourable, closing the gap against 1.8 million barrels per day quota from the Organisation of Petroleum Exporting Countries (OPEC) and allies members (OPEC+). # Nigerian Naira Gains 0.05% as FX Demand Steadies