Naira remains weak at official market despite rising external reserves

Nigeria’s naira remained weak at the official foreign exchange (FX) market, despite rising external reserves occasioned by increased foreign inflows into the country’s economy.

After trading on Thursday, the naira closed on a flat note, depreciated by 0.15 percent as the dollar was quoted at N1,485.36, weaker than N1,483.02 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ Securities Exchange Limited, indicated.

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The local currency steadied at N1,490 per dollar on the parallel market, popularly called the black market.

Nigeria’s foreign currency reserves rose further to $33.58 billion as of June 19, 2024 from $33.159 recorded on June 11, 2024, data from the Central Bank of Nigeria (CBN), revealed.

BusinessDay reported on Wednesday that external reserves would rise further after growing to $33.159 billion as of June 11, 2024 from $32.447 billion in May 10, 2024.

About $5.95 billion from the World Bank and Afreximbank entered into the Nigerian economy, helping to strengthen Nigeria’s external reserves but failed to lift the value of the naira.

Last week, the federal government secured a $3bn African Export-Import Bank (Afreximbank) facility to boost industrialisation. The World Bank recently approved a total of $2.25 billion loan for Nigeria to help stabilise its economy following reforms and scale up support for the poor.

Early in June, 2024, Afreximbank announced an additional disbursement of US$925 million under the syndicated US$3.3 billion crude oil-backed prepayment facility sponsored by the Nigerian National Petroleum Company (NNPC) Limited. This brings the total current funded facility size to US$ 3.175 billion.

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The FX market summary released by the FMDQ showed that the intraday high closed at N1,495 per dollar on Thursday, stronger than N1,514.82 closed on Wednesday. The intraday low depreciated to N1,434.08/$ on the same day as against N1,390 per dollar quoted on the previous day at the official market.