Naira Weakens at Official Window Amid Global Investment Appraisal
The Nigerian naira experienced a depreciation of 0.91 per cent at the official foreign exchange window last week, closing at N1,366.23 per dollar, down from N1,353.9 per dollar. This decline occurred as investors globally reassessed their assets in response to escalating geopolitical tensions, which have strengthened the US dollar against various currencies worldwide.
Parallel Market Shows Sharper Decline
In the parallel market, the naira weakened more significantly, falling by 2.21 per cent to approximately N1,386 per dollar. This sharper depreciation outside the formal market highlights stronger unmet demand for foreign exchange and tighter liquidity conditions, thereby widening the spread between the official and unofficial segments of the forex market.
External Reserves Record Marginal Increase
Amid the currency weakness, Nigeria's external reserves saw a marginal increase, rising to $49.97 billion from $49.83 billion. This modest accretion indicates relatively stable buffers but also underscores the limited scope for aggressive or sustained intervention by the Central Bank of Nigeria (CBN) to stabilise the naira in the face of persistent demand pressures.
Global Oil Benchmarks Rebound
Global oil benchmarks rebounded during the week, supported by heightened geopolitical tensions in the Middle East. Brent crude rose to $108.56 per barrel, while West Texas Intermediate climbed to $98.38 per barrel. Fears of supply disruptions intensified following threats by Iran's Islamic Revolutionary Guard Corps to target energy infrastructure in the region, injecting volatility into oil markets and partially offsetting earlier price declines.
