SAT, 05 NOV, 2022-theGBJournal| This week, Nigeria’s FX reserves maintained its decline for the ninth consecutive week, falling by US$101.78 million w/w to US$37.37 billion (01 November).
At the I&E window (IEW), the naira depreciated by 0.2% to N445.50/USD as total turnover (as of 03 November) declined by 9.8% WTD to USD327.07 million, with trades consummated within the N424.00 – N460.25/USD band.
In the Forwards market, the naira appreciated at the 1-month (+0.1% to N449.03/USD) and 3-month (+0.1% to N458.39/USD) contracts but depreciated at the 2-months (-0.1% to N453.39/USD) and 1-year (-0.3% to N502.47/USD) contracts. Conversely, the naira was flat at the 6-month (N476.49/USD) contract.
At the parallel market, the Naira extended its fall as the rush to buy the greenback persisted. Sellers offered the local at N870/$ Friday as against N820/$ the previous day, a drastic 6.13% drop.
The overnight (OVN) rate crashed by 767bps w/w to 8.8% this week, as the system liquidity improved primarily due to the combination of FAAC disbursement (N465.95 billion) from the prior week and inflows this week from OMO maturities (N20 billion).
For clarity, the average system liquidity closed higher this week at a net long position of N407.81 billion vs a net short position of N15.48 billion in the previous week.
We expect the OVN rate to tilt upwards in the coming week, as we believe the inflow from OMO maturities (N105.00 billion) may not be enough to offset the debit for CBN (NTB, OMO & FX) auctions.
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