This week, US dollar liquidity improved in the foreign exchange market, leading to a slight appreciation of the Nigerian naira. The naira closed at ₦1,600.00 per US dollar in the official market, reflecting a 0.07% increase. This rebound occurred despite limited foreign exchange sales to authorized dealer banks as the market prepares for a test run of an automated FX trading system scheduled for November.
In the parallel market, however, the naira weakened to ₦1,730 per dollar, driven by high demand for invisible FX payments amidst tight supply conditions. Spot data from the FMDQ platform indicated that the naira had appreciated by N1.20 against the dollar, with daily turnover rising to $284.93 million on Friday from $230.99 million on Thursday.
At the Investor’s and Exporter’s (I&E) window, the naira traded within a range of ₦1,682 to ₦1,589.82 against the dollar as preparations for the FX automation test run continue. The Central Bank of Nigeria (CBN) plans to transition from a decade-old over-the-counter trading system to an automated platform starting in December. This move aims to enhance transparency, reduce speculative activities, and eliminate market distortions.
In the global commodities market, oil prices have risen by over 2% this week, with Brent crude trading around $75.82 per barrel and WTI at approximately $71.59. However, gold prices have dipped as investors took profits following a significant rally driven by geopolitical tensions and concerns surrounding the U.S. elections.
Overall, while the naira showed some signs of recovery in the official market, challenges remain in the parallel market, and upcoming changes in the FX trading landscape could significantly impact currency dynamics.
