SAT, JAN 27 2024-theGBJournal|The naira appreciated by 1.2% to N891.90/USD on Friday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Total turnover (as of 25 January 2024) decreased by 40.5% WTD to USD338.77 million, with trades consummated within the N700.00 – N1,399.00/USD band.
In the Forwards market, the naira rates on the 1-month (-6.8% to N1,027.88/USD), 3-month (-7.1% to N1,049.08/USD), 6-month (-7.7% to N1,083.51/USD) and 1-year (-7.9% to N1,155.92/USD) contracts all depreciated.
Looking ahead, we expect FX liquidity conditions to remain tight, pending receipt of expected FX inflows.
While the CBN is slowly clearing backlog demand for US dollars, there continues to be short supply of FX in the market.
We maintain that the situation may reverse: however, it is likely to take several months, and the two distinct exchange rates will most likely remain during this period.
The pressure on the local currency to persist in the near term. Nonetheless, we expect foreign investors to keenly watch the development in the FX space with regards to the expected FX inflows as guided by the authorities, CBN’s recent actions in clearing its FX backlogs, and firm direction of short-term interest rates.
Meanwhile, this week, Nigeria’s FX reserves expanded further, as the gross reserves level increased by USD77.69 million w/w to USD33.35 billion (23 January).
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