The naira value dropped 0.77% to N1,609.20 on Friday despite US dollar sales to authorised dealers banks in the official currency market.

The exchange rates worsened after the monetary authority lauded low FX spread at the monetary policy committee (MPC) meeting in the week.

The MPC noted the narrowing spread between the various foreign exchange segments of the market, an indication of price discovery and improved market efficiency, thus reducing opportunities for arbitrage and speculation, according to CBN communique.

The Committee noted that the increase in the level of external reserves would further build confidence for a more stable exchange rate and thus urged the Bank to explore available avenues to improve inflows, especially through diaspora remittances.

The Nigeria’s foreign reserves maintained uptrend in the week as FX inflows continues to pop in consistently. The nation’s gross reserve level grew by USD424.91 million during the week to USD36.44 billion.

Conversely, the naira fell slightly to N1609.29 per greenback at the Nigerian Autonomous Foreign Exchange Market even as the apex bank sold a total of about $148 million to banks twice within the week.

Although the CBN maintained its intervention in the FX market, it remained insufficient to support the naira, as FX demand continued to outweigh overall supply.

“In the interim, we expect the naira to remain weak, driven by tight market liquidity due to the CBN’s limited capacity to significantly intervene in the FX market”, Cordros Capital Limited said in a note.

The CBN sold a cumulative amount of 148 million dollars to authorised dealers in the Nigerian Foreign Exchange Market. The CBN sold US dollars to 29 authorised dealer banks at exchange rates between N1,470 -N1,510 per US dollar.

In the parallel market, the naira closed the day at an average of N1,575 per dollar as FX demand rose sharply, from N1565 in the previous day close.