The Naira came under foreign exchange (FX) pressure on Tuesday, August 26, as its value further weakened against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) at the close of transactions.
According to data obtained from the Central Bank of Nigeria (CBN), the Nigerian currency lost N1.11 or 0.07 per cent against the greenback yesterday to sell for N1,537.61/$1, in contrast to the N1,536.51/$1 it was traded on Monday.
However, the domestic currency appreciated against the Pound Sterling in the official market during the session by N1.47 to close at N2,074.24/£1 compared with the previous day’s N2,075.71/£1 and gained N4.45 against the Euro to close at N1,793.17/€1 versus Monday’s closing price of N1,797.62/€1.
In the parallel market, the Nigerian Naira depreciated against the Dollar yesterday by N2 to trade at N1,547/$1 compared with the preceding session’s rate of N1,545/$1.
There has been a rising demand for the US Dollar by eligible corporate FX users seeking foreign payments, pushing the central bank to inject FX into the system.
AIICO Capital Limited, in a note, said the interbank NFEM saw increased FX demand against a limited supply.
Meanwhile, Nigeria’s external reserves could rise to about $45 billion by the end of the year, according to market analysts. According to Cowry Assets Management, the momentum of reserve growth appears likely to continue, supported by steady offshore inflows and potential external borrowings planned by the government.
But, this is hinged on global risk conditions remaining broadly supportive and offshore flows not significantly disrupted. With the reserves position strengthening, the CBN will have greater flexibility to sustain its interventionist approach in the FX market.
As for the cryptocurrency market, it grew during the session as traders jumped back in after Monday’s sell-off. Traders seized lower prices as an opportunity to re-enter the market.
Analysts warn of overheated sentiment ahead of Friday’s PCE inflation data, a key signal for the US Federal Reserve next move.
Also, investors and traders remain widely optimistic due to expectations of monetary easing and increased institutional demand, with Solana (SOL) expanding by 7.4 per cent to $203.06.
Dogecoin (DOGE) appreciated by 4.5 per cent to $0.2205, Ethereum (ETH) rose by 3.7 per cent to $4,594.36, Cardano (ADA) increased by 2.9 per cent to $0.8642, Ripple (XRP) grew by 2.8 per cent to $3.00, Litecoin (LTC) jumped by 2.2 per cent to $113.48, Binance Coin (BNB) soared by 1.6 per cent to $859.24, and Bitcoin (BTC) advanced by 0.9 per cent to $111,273.21, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.