SAT, 20 AUG, 2022-theGBJournal| Nigeria’s FX reserves increased after four weeks of decline, rising by USD22.35 million w/w to USD38.91 billion (17 August).
Across the FX windows, the naira appreciated at the I&E window by 0.1% to N429.05/USD, but depreciated by 0.6% to N686.00/USD at the parallel market.
In the Forwards market, the naira was flat at the 1-month NGN429.54/USD) contract but expanded at the 3-month (+0.2% to NGN437.51/USD) and 1-year (+0.2% to NGN481.17/USD) contracts; the naira depreciated at the 6-month (+0.1% to NGN452.82/USD) contract.
Meanwhile, in line with expectations, the overnight (OVN) rate expanded by 200bps w/w to 15.0%, as the debit for FGN bonds (NGN200.57 billion) and FX auctions outweighed the inflow from OMO maturities (NGN95.79 billion).
We also highlight that system liquidity was tighter this week, averaging a net short position of NGN78.80 billion (vs a net short position of NGN20.82 billion in the previous week).
Next week, we expect the OVN rate to decline slightly, following the inflow of NGN111.82 billion – FGN bond coupon (NGN66.82 billion) and OMO maturities (NGN45.00 billion) – expected to hit the system.
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