CBN Confirms New Exchange Rate as Naira Depreciates Despite High Reserves
- Naira weakens to N1,328.50 at the official market as tighter liquidity and rising dollar demand pressure the currency
- Local currency gains against the pound and euro while Nigeria’s external reserves climb to $54.808 billion
- Brent crude rises above $102 as global interest rates and geopolitical developments shape Nigeria’s foreign exchange outlook
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Nigerian naira weakened against the US dollar across the country’s foreign exchange markets as demand pressures and tighter liquidity weighed on the local currency.
The depreciation came after the Central Bank of Nigeria (CBN) reduced its benchmark interest rate, while developments in global financial and oil markets continued to influence investor sentiment.
Source: Getty Images
Naira closes at N1,328.50 at official market
Data from the CBN showed that the naira closed at N1,328.50 per dollar at the Nigerian Foreign Exchange Market (NFEM), representing a 0.05% depreciation from the previous session.
The pressure was more pronounced in the parallel market, where the currency weakened by 0.51% to N1,387 per dollar amid increased demand for foreign currency.
The movement widened the gap between the official and parallel market rates. The FX spread increased to about N59 per dollar from N52 in the previous session.
A widening gap between the two markets can indicate differences in dollar supply and demand across the official and informal segments, according to a report by MarketForces Africa.
Naira gains against pound, euro
Despite its weakness against the dollar, the naira strengthened against some major currencies.
According to the CBN’s daily foreign exchange report, the local currency settled at N1,762.92 against the British pound and N1,514.89 against the euro at the official window.
Meanwhile, Nigeria’s gross external reserves increased further to $54.808 billion, providing a stronger buffer for the economy amid volatility in global financial and commodity markets.
Oil rises above $102 per barrel
Global oil prices also remained elevated, with Brent crude climbing 2.16% to $102.54 per barrel amid uncertainty surrounding the reopening of the Strait of Hormuz.
The latest increase pushed Brent’s year-to-date gain to 68.51%.
However, plans by Saudi Arabia to restart exports through its East-West pipeline, alongside signs of progress in US-Iran talks, helped limit further increases in crude prices.
Higher oil prices can potentially support Nigeria’s foreign exchange earnings because crude remains a major source of export revenue, although the overall impact depends on production and export volumes.
Global markets react to US rates
Source: Getty Images
In international markets, higher US interest rates and elevated Treasury yields continued to put pressure on emerging-market assets.
Expectations surrounding US-Iran talks also reduced some demand for safe-haven assets. Gold declined 0.84% to $4,327.15 per ounce and was down 0.69% since the beginning of the year.
For Nigeria, movements in oil prices, global interest rates and domestic dollar liquidity are likely to remain important factors shaping the naira’s performance in the foreign exchange market.
CBN rate cut: Experts predict naira-to-dollar price
Legit.ng earlier reported that the naira may depreciate following the Central Bank of Nigeria’s (CBN) 350-basis-point cut in its Monetary Policy Rate (MPR) to 23%, according to Bismarck Rewane, Managing Director of Financial Derivatives Company.
Rewane said the lower interest rate could reduce returns on naira assets and put pressure on the currency.
Source: Legit.ng
