Market News

BY  Tony Chukwunyem

Citing what they described as “sustained improvement in external reserves and ongoing policy measures aimed at enhancing foreign exchange market liquidity,” analysts at Cowry Asset Management Ltd have said that they expect the naira to remain largely stable in the short term.

The analysts, who stated this in a report released over the weekend, however, said “demand pressures and global market developments may continue to drive intermittent volatility.”

They noted that “the naira delivered a mixed performance against the US dollar across the foreign exchange market,” last week, with the local currency depreciating slightly by 0.04 per cent week-on-week to close at N1,380.18/$1 at the official market, while it remained unchanged in the parallel market, closing at N1,379.07/$1.

The report read in part: “During the week, the naira delivered a mixed performance against the US dollar across the foreign exchange market. At the official window, the currency depreciated marginally by 0.04 per cent weekon-week to close at N1,380.18/$, while it remained unchanged in the parallel market, closing at N1,379.07/$.

“Meanwhile, Nigeria’s external reserves rose by 0.23 per cent week-on-week to $51.89 billion, indicating a modest improvement in the country’s external liquidity position.

In the commodities market, crude oil prices were on track to record their strongest weekly gain since April, driven by renewed geopolitical tensions in the Middle East. “The re-escalation of the conflict, coupled with disruptions to shipping flows through the Strait of Hormuz, pushed oil prices to their highest levels in more than a month.

As of Friday’s Asian trading session, both major crude benchmarks extended their gains following a sixth consecutive night of US military strikes on Iran. “We expect the naira to remain broadly stable in the near term, supported by the sustained improvement in external reserves and ongoing policy measures aimed at enhancing foreign exchange market liquidity.

“However, demand pressures and global market developments may continue to drive intermittent volatility. In the commodities market, crude oil prices are likely to remain elevated as geopolitical tensions in the Middle East continue to influence supply expectations.

Nevertheless, market participants will closely monitor developments in the region, OPEC+ policy signals, and global demand condi- tions for further direction.”

New Telegraph reports that analysts at Quest Merchant Bank said in a note last week that they expect Nigeria’s external reserves to continue heading north in the near future driven by factors such as improved export earnings, especially higher crude oil output, and sustained Foreign Portfolio Investment (FPI) inflows.