SAT, 06 AUG, 2022-theGBJournal| Nigeria’s FX reserve declined for the second consecutive week, decreasing by USD133.52 million w/w to US$39.09 billion (04 August).
Across the FX windows, the naira appreciated by 0.2% and 8.3% to NGN428.13/USD and NGN660.00/USD at the I&E window (IEW) and parallel market, respectively. The local currency began bouncing back since Monday, gaining more than N50/$, leaving speculators in the doldrum.
The Central Bank of Nigeria has always maintained the position that it has enough liquidity to support the market over the short-term.
But analysts at Cordros Research highlights that foreign inflows are paramount for sustained FX liquidity over the medium term.
‘’Considering the tepid accretion to the reserves given the (low crude oil production level and elevated PMS under-recovery costs, FPIs which have historically supported supply levels in the IEW will be needed to sustain FX liquidity levels in the medium to long term,’’ Cordros said.
Meanwhile at the I&E window, total turnover (as of 4 August 2022) declined by 2.2% WTD to US$452.96 million, with trades consummated within the N409.97 – N446.00/USD band. In the Forwards market, the rate weakened at the 1-month (-0.3% to N429.31/USD), 3-month (-0.7% to N438.86/USD), 6-month (-2.7% to N461.49/USD) and 1-year (-1.3% to N479.17/USD) contracts.
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