SAT, 12 DEC, 2020-theGBJournal- Nigeria’s FX reserves sustained its descent, declining by USD197.84 million w/w to USD35.01 billion, as the outflows for the CBN’s interventions across the various FX windows continue to outstrip dollar inflows.
The naira strengthened by 0.3% to NGN395.00/USD at the I&E window, while it was flat at NGN475.00/USD in the parallel market. Across the forward contracts, the naira weakened in the 1-month (-0.1% to NGN398.01/USD) contract but appreciated in the 3-month (+0.5% to NGN404.54/USD), 6-month (+0.7% to NGN414.90/USD) and 1-year (+1.0% to NGN435.32/USD) contracts.
Going forward, we expect CBN’s FX management strategies to continue supporting the naira at its current level at the official and I&E windows.
However, we believe the parallel market rate will remain volatile and continue to trade above the CBN’s Relative Purchasing Power Parity (RPPP) of NGN433.64/USD and our REER fair value estimate of NGN453.67/USD at the current level of intervention in the FX market.
Twitter-@theGBJournal|email: info@govandbusinessjournal.com.ng
