CBN Announces New Dollar Price as Naira Appreciates Amid Slow FX Demand
- The naira gained against the dollar, pound and euro as improved foreign exchange supply supported the official market
- Interbank forex turnover fell 59%, while the gap between official and parallel-market dollar rates narrowed to 2.88%
- Analysts say oil prices above $100 a barrel could support naira stability, but sustained gains depend on steady dollar inflows
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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 naira strengthened against the US dollar, British pound and euro as foreign exchange supply improved and interbank trading activity slowed, according to data from the Central Bank of Nigeria (CBN).
The local currency recorded modest gains at the official foreign exchange market, while the dollar also weakened in the parallel market, narrowing the gap between both exchange rates to below 3%.
Source: Getty Images
The development comes amid improved foreign exchange liquidity, with foreign portfolio investors, non-bank corporates, exporters and other market participants contributing to dollar supply.
Naira appreciates against dollar at official window
Data published by the CBN showed that the naira appreciated by 0.07% against the US dollar at the Nigerian Foreign Exchange Market (NFEM) on Thursday.
The local currency closed at N1,331.6139 per dollar, compared with N1,332.5893 recorded in the previous trading session.
According to a report by Market Forces Africa, during intraday trading, the exchange rate fluctuated between N1,327 and N1,333.50 per dollar, reflecting relatively stable trading conditions at the official window.
The marginal appreciation suggests that improved dollar availability helped support the naira despite continued demand for foreign currency from businesses and other market participants.
Dollar supply improves as trading activity slows
Foreign exchange liquidity improved as foreign portfolio investors supported market activity, while non-bank corporates and currency inflows from exporters and importers contributed to supply.
However, interbank foreign exchange turnover dropped sharply, indicating a significant slowdown in trading activity among financial institutions.
According to the CBN data, turnover fell by approximately 59% to $201.562 million from $490.855 million recorded in the previous session.
The number of transactions also declined, with deals at the interbank window dropping to 128 from 179 on Wednesday.
The fall in turnover suggests that fewer transactions were executed during the session, even as the naira recorded modest gains against major international currencies.
Naira also gains against pound and euro
The naira extended its gains to other major currencies at the official foreign exchange market.
It appreciated by 0.07% against the British pound to close at N1,764.26 per pound. Against the euro, the currency also gained 0.07%, settling at N1,490.48.
The parallel market recorded similar movements, with the dollar declining by 0.29% to N1,370.
The pound fell by 0.55% to N1,810, while the euro dropped by 0.33% to N1,505.
These movements narrowed the gap between the official and parallel market dollar rates to 2.88%, compared with 3.11% previously.
The smaller spread indicates a slight convergence between the two markets, although their exchange rates remain different.
Oil prices could support naira stability
Market analysts expect the naira to remain relatively stable at the official window in the near term, with the gap between the official and parallel market rates staying below 3%.
According to AIICO Capital Limited, crude oil prices above $100 per barrel could help sustain foreign exchange inflows and support the local currency.
Source: Getty Images
Higher oil prices can strengthen Nigeria's foreign exchange position by boosting potential export earnings, although actual gains depend on production levels, sales and the volume of proceeds repatriated into the domestic market.
The naira has also recorded a notable year-to-date gain against the dollar at the NFEM, with the dollar down 7.25% against the local currency over the period, according to the supplied market data.
However, sustained appreciation will depend on the consistency of dollar inflows, foreign investor participation and demand for foreign currency from businesses and other market participants.
CBN releases new dollar price amid naira’s stability
Legit.ng earlier reported that Nigeria’s naira held relatively steady against the United States dollar in early October, offering some breathing room for businesses and households whose expenses are exposed to exchange-rate swings.
Market reports for Friday, October 9, placed the currency at approximately ₦1,329.34 per dollar at the Nigerian Foreign Exchange Market (NFEM), while the parallel market quoted around ₦1,385.
Source: Legit.ng
