Nigeria: Naira Records 10% Surge Amidst Adequate Forex Liquidity

The official exchange rate witnessed a notable upswing in favor of the Nigerian naira on Monday, marking a significant 10% gain, as reported by data sourced from the FMDQ dashboard. This positive momentum was complemented by a moderate rebound in the parallel market, attributed to the ample liquidity of US dollars circulating in the system.

Key players in the forex market concluded transactions at considerably improved rates compared to the previous week, setting a positive tone ahead of the yuletide season. Some market analysts anticipate further strengthening of the local currency, anticipating an influx of foreign currency from the diaspora as the year comes to a close.

Analysts, sharing insights during the filing of this report, noted that Nigerians residing abroad have initiated remittances of foreign currency for their families back home. They emphasized that this period is not a peak season for imports, suggesting that the year-end forex demand might be insufficient to significantly impact the naira’s stability.

Despite growing optimism regarding oil export receipts, the country’s external reserves continue to experience a decline. Nevertheless, market experts express hope that the decision to increase Nigeria’s oil production output will have a positive impact on the government’s financial standing. On the global front, oil prices faced a downward trend on Monday, with Brent Crude trading at $78 per barrel and WTI at $73.19 per barrel.

Data extracted from the Central Bank of Nigeria (CBN) indicates that the gross external reserves remain within the $33 billion range.

In the foreign exchange market, the naira exhibited a robust performance against the US dollar, appreciating by an impressive 9.64% in the official market, closing at N837.77, according to data sourced from the FMDQ FX OTC dashboard.

Simultaneously, in the parallel market, the naira registered a day-on-day appreciation of 0.34%, concluding at N1,159 per dollar. There is a possibility that this space may witness a surplus of supply due to the inflow of diaspora remittances.