…for the first time in twelve weeks, the country’s FX reserves declined, as the gross reserve level decreased by USD34.92 million w/w to US$40.24 billion (27 November)
SAT NOV 30 2024-theGBJournal| The naira fell this week by 1.2% w/w to N1,672.69/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM) despite the FX inflows from FPIs in anticipation of an OMO auction and the Central Bank of Nigeria’ (CBN) intervention, selling c. US$102.00 million to authorized dealers.
Notably, for the first time in twelve weeks, the country’s FX reserves declined, as the gross reserve level decreased by USD34.92 million w/w to US$40.24 billion (27 November).
Total turnover at the NAFEM as of 28 November increased by 67.1% WTD to USD1.97 billion, with trades consummated within the N1,557.00/US$ – N1,706.00/US$ band.
In the forwards market, the naira rates increased across the 1-month (+2.2% to N1,703.48/USD), 3-month (+2.3% to N1,776.14/USD), 6-month (+2.1% to N1,888.22/USD) and 1-year (+2.5% to N2,104.86/USD) contracts.
In anticipation of the upcoming Eurobond issuance (US$1.70 billion), we expect stronger FX reserves in the short term, supporting CBN’s ability to keep the naira stable in the short to medium term.
However, in line with CBN’s FX reserve management and price discovery goal, we do not expect a significant appreciation in the naira as the CBN maintain tepid intervention to keep the naira stable.
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