Naira Depreciates Amid Squeezed Liquidity and High Demand for International Payments
The Nigerian naira weakened against major currencies in the official FX market due to squeezed liquidity. Demand for international payments surpassed available funds, causing a 53-basis-point depreciation in the exchange rate.
According to data from the Central Bank of Nigeria (CBN), the official spot exchange rate dropped to N1350.4134 on Wednesday, down from N1343.3202 quoted the previous day. Transactions were executed between N1348 and N1353 as the market anticipated a possible slowdown in the local currency's rapid appreciation.
The CBN had previously mopped up US dollars at the official window to halt the naira's momentum following a fast appreciation, aiming to make Nigerian exports competitive in the global market. The move seemed to be effective as the naira strengthened against major currencies earlier this year.
However, the recent surge in interbank FX turnover increased to $370.980 million, about 2% from $364.709 million reported on Tuesday. Despite this increase, the number of interbank FX deals declined to 100 from 108 the previous day, indicating a moderate slowdown in activities.