By Boluwatife Oshadiya
Copyright bizwatchnigeria
The Nigerian naira crossed a significant psychological threshold in the foreign exchange market, trading below the N1,500 mark against the United States dollar at the Nigerian Foreign Exchange Market (NFEM). The development reflects growing dollar supply and improved liquidity in the official window.
On Monday, data from the Central Bank of Nigeria (CBN) showed that the official spot rate touched an intraday low of N1,493/$1, while some transactions were completed at highs of N1,502/$1.
The rally in the domestic currency was largely supported by inflows from exporters and foreign portfolio investors positioning ahead of an upcoming Open Market Operation (OMO) auction. Additionally, dollar supply from International Oil Companies (IOCs) further boosted market liquidity.
Last week, the naira recorded solid gains against the greenback, appreciating by 0.98% week-on-week to close at N1,501.50/$1 at the Nigerian Autonomous Foreign Exchange Market (NAFEM). The parallel market also saw mild improvement, appreciating by 0.33% to N1,535/$1. This left the official market rate at a N35.50 premium (2.23%) over the parallel market.
According to data from Coronation Merchant Bank, total FX inflows stood at $550.90 million, only slightly lower than the $567.20 million recorded in the prior week. Foreign portfolio investments accounted for the bulk of inflows, contributing $303.8 million (55.15%). Exporters followed with 17.61%, while non-bank corporates added $91.3 million (17.57%). Other contributors included corporates ($23.8 million or 4.32%), foreign direct investment ($18.7 million or 3.39%), the CBN ($13 million or 2.36%), and individuals ($3.3 million or 0.60%).
Meanwhile, Nigeria’s external reserves climbed by $357.84 million to reach $41.66 billion, supported by steady accretions during the week.
Market analysts project that the naira could trade within a stable band in the short term, buoyed by sustained portfolio inflows and strong reserve levels. However, they cautioned that renewed pressure could emerge if capital inflows weaken or if demand for foreign exchange surges ahead of year-end activities.
