The Naira stabilized within the mid-N1,400s/$ range amid increased FX holdings in the Nigerian treasury and high FX demand from importers.
Currency traders in Lagos’ parallel market offered dollars at slightly higher rates.
The Nigerian currency experienced some level of depreciation in the unofficial market, trading between N1,460/$ and N1,475/$ on Thursday, while it dropped to N1,450/$ in Nigeria’s official Foreign Exchange Market (NFEM).
Analysts attribute the disparity between the NFEM rate and the parallel market primarily to high U.S dollar demand for imports and personal transfers, along with limited forex inflows into formal channels.
However, the naira’s fundamentals remain strong in the mid-term, as Nigeria’s foreign exchange reserves rose to $46.7 billion, reaching their highest level in seven years. This increase in reserves can be attributed to stronger oil revenues, greater portfolio inflows, and renewed confidence among foreign investors.
Deputy Governor for Economic Policy Muhammad Abdullahi, representing CBN Governor Olayemi Cardoso in Abuja, stated that this reserve position marks a significant turning point in the bank’s reform agenda.
He emphasized that the current reserve level can cover more than ten months’ worth of imports, reflecting both the rising foreign demand for Nigerian assets and improved economic conditions. According to Cardoso, the gains are also linked to better market liquidity, increased crude sales, and measures aimed at stabilizing the exchange rate.
Meanwhile, the House of Representatives’ Ad-Hoc Committee on Implementation and Oversight of the Naira-for-Crude Oil Policy has given invited agencies a deadline of seven days, until November 27, to provide the necessary documents.
The committee’s chairman, Hon. Boniface Emerengwa, expressed this warning after several invited agencies failed to attend the investigative hearing and did not submit the required documents.
“The investigative hearing was adjourned due to the gross negligence and lack of seriousness displayed by the relevant stakeholders,” Emerengwa stated.
He added, “Despite ample notice, most stakeholders have not acknowledged the legislative arm’s role in collaborating with the Executive for the effective implementation of the policy, as demonstrated by their failure to provide the necessary documents within the stipulated timeframe.” Emerengwa expressed his dissatisfaction with the situation.
U.S dollar index holds 100 support line
The Dollar Index (DXY), which gauges the strength of the US dollar against a basket of six global currencies, is trading lower at approximately 100.15. Conflicting and delayed US jobs data have created uncertainty regarding interest rates.
Forex traders are awaiting the preliminary reading of the US S&P Global Purchasing Managers Index (PMI), which is set to be released later Friday for additional insight.
The Bureau of Labor Statistics (BLS) reported that the US economy added more jobs than expected in September, but an increase in the unemployment rate and downward revisions to previous months present a mixed picture for the US Federal Reserve (Fed) as it considers whether to lower interest rates next month to support the labor market.
Important economic reports on jobs and inflation have been delayed due to an ongoing US government shutdown, adding to the uncertainty surrounding the DXY.
However, cautious remarks from Fed officials may help to limit the DXY’s losses. Cleveland Fed President Beth Hammack reiterated her opposition to further rate cuts, citing concerns about current price levels.
Meanwhile, Philadelphia Fed President Anna Paulson mentioned on Friday that she is approaching the policy meeting in December “cautiously,” indicating that the central bank must carefully balance ongoing inflation risks against the slowdown in labor momentum.
