In a week marked by fluctuating market dynamics, the Nigerian naira experienced a modest depreciation of 0.6% against the U.S. dollar, settling at NGN1,641.27/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
This decline occurred despite the Central Bank of Nigeria (CBN) stepping in to stabilize the currency, selling approximately USD50 million to authorized dealers.
Amidst this backdrop, Nigeria’s foreign exchange reserves demonstrated a positive trend, growing by USD63.06 million week-on-week to reach USD38.67 billion as of October 10. This marks the sixth consecutive week of reserve growth, indicating a potential buffer for the naira in the face of ongoing market pressures.
However, total turnover at NAFEM saw a significant decrease of 31.9% week-to-date, dropping to USD880.34 million. Trades were predominantly conducted within a band of NGN1,540.00/USD to NGN1,650.00/USD. Meanwhile, in the forwards market, naira rates exhibited a mixed performance.
Shorter-term contracts, such as the 1-month and 3-month, saw increases of 0.6% and 0.8% respectively, while longer-term contracts faced declines, with the 6-month contract down 0.3% and the 1-year contract down 1.7%.
Analysts suggest that the naira may trade with reduced volatility in the near term, as the CBN continues its interventions in the foreign exchange market as the Apex bank’s ongoing efforts aim to maintain a stable environment for both investors and consumers amid challenging economic conditions.
