Naira muted in Black Market despite successful NGN Eurobond Issuance

The Nigerian Naira is still under significant selling pressure in the nation’s precarious foreign exchange market, even after a hawkish central bank recently raised interest rates.

In the unofficial market, price action shows that short sellers maintain firm control over the N1,725 support line.

The Naira is underperforming this year despite the CBN’s foreign exchange reserves hitting multi-month highs. For the first time in thirty-two months, the CBN’s reserves reached over $40 billion.

“This result demonstrates the resilience of the Nigerian credit and the increasing confidence of investors. It also shows that we have improved our liquidity position and are still able to access international markets to support the government’s financing needs,” stated Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria.

The automated foreign exchange platform is expected to make Nigeria’s currency trading on the official market more transparent.

Global rating firm Fitch Ratings has stated that despite multiple efforts by the Central Bank of Nigeria, the country’s foreign exchange market has not yet stabilized.

According to the IMF’s report, “Policy actions by local authorities have also resulted in positive developments; for example, in Nigeria, rate hikes and the clearing of overdue domestic central bank foreign exchange obligations have helped the Naira show more signs of stability.”

The haven currency showed stability in the global currency market as traders weighed the likelihood of a Federal Reserve interest rate cut this month.

The U.S. payrolls report, due later today, will provide more information on the situation. Traders are waiting for important monthly payroll data on Friday for additional insights on the rate outlook.