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Foreign exchange markets experienced varied movements as the demand for the US dollar was met with sufficient supply. According to data from the FMDQ platform, the Naira demonstrated strength against the dollar, closing at N831.47 in the official market, a significant improvement from the previous rate of N881.88 per dollar.
Despite Nigeria’s gross external reserve declining to $33.068 billion, reflecting the government’s heightened interest in foreign loans, analysts note that this reserve still provides import cover for seven months. The Naira has struggled in a bearish trend, persisting even after a considerable official devaluation in June 2023. The central bank remains optimistic about enhancing forex supply as it gradually addresses the FX forward backlog.
In the parallel market, the Naira maintained stability at N1,160, with no change from the previous session, attributed to year-end demand for import payments.
External reserves lingered around $33.2 billion amid a slowdown in forex inflow into Nigeria, as reported by data from the central bank’s website. Nigeria, aiming for a higher quota from OPEC and its allies for 2024, has enhanced oil production output. To meet the spending plan outlined in the 2024 budget, analysts emphasize the need for increased oil pumping.
In the global commodity market, Brent Crude rose by 0.66% to reach $82.22 per barrel, while WTI Crude increased by 0.62% to $76.88 per barrel.
All eyes are currently on OPEC+ as the oil group convenes to discuss the output policy for 2024. Analysts express growing expectations that OPEC+ might implement deeper supply cuts, potentially adding to the voluntary cuts from major producers like Saudi Arabia and Russia. The market faces downside risks if OPEC+ falls short of these expectations. Additionally, uncertainty looms over whether the group has resolved the disagreement concerning production targets for Angola and Nigeria in the coming year.
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