SAT 24 APRIL, 2021-theGBJournal- Nigeria’s FX reserves recorded its first decline in five weeks, as it fell by USD131.97 million w/w to USD35.12 billion (22nd April 2021).
Meanwhile, the naira appreciated by 0.2% to NGN410.00/USD at the I&E window (IEW) but weakened by 0.6% to NGN485.00/USD in the parallel market. At the IEW, total turnover (as of 22nd April 2021) increased by 6.3% WTD to USD317.36 million, with trades consummated within the NGN381.00 – 437.41/USD band.
In the Forwards market, the rate depreciated in the 1-month (-0.2% to NGN413.70/USD) contract, strengthened in the 1-year (+0.1% to NGN448.27/USD) contract and stayed flat in the 3-month (NGN419.70/USD) and 6-month (NGN428.59/USD) contracts.
We expect improved liquidity in the IEW over the medium term, given higher oil prices and an expected increase in crude oil production. Accordingly, we expect the naira to remain relatively range-bound (NGN410.00/USD – NGN415.00/USD) at the IEW. Similarly, we believe the CBN will devalue the naira by 5.3% to NGN400.00/USD at the interbank market to narrow the gap with the IEW rate.
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