Last Week, Nigeria’s foreign exchange (FX) reserves experienced a decrease of USD317.95 million week-on-week, reaching USD33.51 billion as of April 3rd. Despite this decline, the naira appreciated by 4.7% to NGN1,251.05/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
However, total turnover at the NAFEM window saw a significant decrease, dropping by 70.7% week-to-date to USD633.65 million as of April 4th, 2024. Trades were consummated within the NGN1,200.00 – NGN1,312.00/USD band.
In the Forwards market, the naira rates appreciated across various contracts, with rates increasing by 4.4% for the 1-month contract, 5.5% for the 3-month contract, 5.7% for the 6-month contract, and 4.2% for the 1-year contract.
In recent times, the Central Bank of Nigeria (CBN) has been continuously intervening in the FX market to stabilize the naira. This intervention includes the sustained sale of US dollars to eligible Bureau de Change (BDCs) and the maintenance of high yields on naira-denominated assets to support Foreign Portfolio Investment (FPI) inflows.
Despite these efforts, analysts say the CBN’s intervention in the FX market is expected to remain limited in the near term due to low FX reserves anticipating the naira to remain stable in the short term, supported by tighter monetary policy conditions and improved FX liquidity.
