SAT, OCT 14 2023-theGBJournal|Nigeria’s FX reserves recorded accretion this week for the first time since 19 May 2023, as gross reserves increased by USD1.72 million w/w to USD33.22 billion (12 October).
Given the CBN’s recent circular stating that importers of all the 43 items previously restricted in 2015 can now purchase FX in the Nigerian Foreign Exchange Market (NFEM), we expect the official exchange rate to depreciate towards the parallel market while the parallel market rate appreciates towards the official market such that the two rates find a new middle ground in the near term based on current FX liquidity conditions.
However, when the market realises that FX supply is still minimal at the official market, importers will return to the parallel market to fulfil their FX obligations.
The preceding will lead to another round of FX pressures in the parallel market.
Meanwhile, the value of the Naira to the dollar depreciated by 310bps to print at N764.86/$ this week at the Investors and Exporters FX Window, with total turnover at the window (as of 12 October 2023) increasing by 79.1% WTD to USD629.37 million, as trades were consummated within the N700.00 – N846.00/USD band.
In the Forwards market, the rate depreciated across the 1-month (-0.4% to N789.34/USD), 3-month (-0.4% to N807.82/USD) and 6-Month (-0.1% to N837.95/USD) contracts, while the 1-year (+0.4% to N899.70/USD) contract appreciated.
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