Exchange Rate Weakens Near N1,351 as Naira Faces Selloffs
The official exchange rate weakened to near N1,351 as the Naira continued to face selloffs, driven by rising demand for international payments, settlements of offshore liabilities, and offshore repatriations.
According to official data released by the Central Bank of Nigeria (CBN) on Tuesday, the local unit closed at N1,350.8587 per US dollar after peaking at N1,354/$ during the intraday trading session, from N1,349.3413 the previous day.
The Nigerian foreign exchange market (NFEM) has continued to see sustained increases in hard currency demand, driven by seasonal imports and year-end corporate obligations.
Some analysts also cited pre-election demand for dollars, though claims about political office holders ramping up foreign currency purchases remain unconfirmed.
Financial institutions’ activity in the interbank FX market increased, with total US dollar turnover climbing about 18% to $248.071 million on Tuesday from $210.375 million the previous day.
Deal counts at the official window also rose to 144, led by dollar buyers, up from 116 interbank FX transactions logged the previous day.
The official rate for transactions during the day hovered between N1,342.50 and N1,354, closing the day at N1,353.50, with the NFEM rate settling at N1,350.8587 per US dollar.
Elsewhere, the nation’s foreign reserves continued to decline, falling below $55 billion at the start of the week due to sustained FX outflows. This marked nine straight days of outflows amidst CBN FX interventions in the currency market.
Nigeria’s external reserves had previously gained traction after forex market reforms, with elevated global oil prices and rising crude production bolstering the gains. OMO bill inflows from offshore investors and dollar inflows from multilateral and external lenders also boosted external reserves.
