SAT FEB 08 2025-theGBJournal| The naira depreciated by 1.8% to N1,501.61/USD at the Nigerian Foreign Exchange Market (NFEM), despite inflows from FPIs and the intervention of the CBN, selling USD60.30 million to authorized dealers.
Also, the FX reserves level declined for the fifth consecutive week by USD269.78 million w/w to USD39.45 billion (6 February).
In the forwards market, the naira rates decreased on the 1-month (-0.1% to N1,533.91/USD) contract, while it increased across the 3-month (+0.8% to N1,592.44/USD), 6-month (+1.6% to N1,678.48/USD) and 1-year (+3.7% to N1,844.88/USD) contracts.
In the near term, we expect FX market liquidity to remain strong, driven by inflows from foreign portfolio investors (FPIs), supported by attractive carry trade opportunities and a relatively stable naira.
However, global uncertainties, including the ripple effects of US trade tariffs, pose a significant risk. Additionally, we anticipate that the CBN will maintain its interventions, particularly during periods of liquidity shortages. As a result, we foresee the naira holding steady in the short term.
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