SAT, OCT 07 2023-theGBJournal| The value of the Naira to the dollar strengthened by 178 bps week-on-week to print at N741.85/$ this week at the Investors and Exporters FX Window, with total turnover at the window (as of 05 October 2023) decreasing by 42.6% WTD to USD271.06 million, as trades were consummated within the N700.00 – N819.90/USD band.
In the Forwards market, the naira rate on the 1-month (+0.6% to N786.31/USD) contract appreciated but recorded depreciations across the 3-month (-0.2% to N804.88/USD), 6-month (-2.0% to N837.36/USD) and 1-year (-3.0% to N903.54/USD) contracts.
At the same time, Nigeria’s FX reserves declined further this week, as the gross reserves level fell by USD10.59 million w/w to USD33.23 billion (05 October).
At the money market, the overnight (OVN) rate declined by 170bps w/w to 1.7%. We highlight that the OVN was depressed throughout the week, as the disbursement of FAAC allocation (N668.86 billion) supported system liquidity despite CRR debits on Wednesday which amounted to c.N718.00 billion.
Accordingly, the average system liquidity closed higher at a net long position of N804.77 billion (vs. a net long position of N137.20 billion in the previous week).
Next week, we expect the OVN rate to remain low given ample financial system liquidity and the additional inflows from OMO maturities (N10.00 billion) within the week amid the expected absence of significant outflows.
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