SAT, MAY 27 2023-theGBJournal |Nigeria’s FX reserve shed the previous week’s gain, as the gross reserve position declined by US$16.25 million w/w to close at US$35.18 billion (23 May) with no positive signal that denotes an improvement in FX supply relative to the pre-pandemic levels.
Accretion to the reserves is still tepid as low crude oil production and elevated PMS under-recovery costs, FPIs remain unsupportive.
The supply levels in the IEW needed to sustain FX liquidity levels in the medium to long-term was also diminished during the week.
The naira depreciated by 0.3% to N464.51/US$at the I&E window (IEW). On activity levels, the total turnover (25 May) at the IEW fell by 13.7% WTD to US$557.31 million, with trades consummated within the N449.92 – N632.00/US$ band.
In the Forwards market, the naira appreciated across the 1-month (+1.5% to N470.76/USD), 3-month (+6.6% to N485.78/USD), 6-month (+10.1% to N506.61/USD) and 1-year (+6.7% to N538.72/USD) contracts.
Meanwhile, the overnight (OVN) rate dipped by 238bps to 13.3% as inflows from FAAC allocation (N407.13 billion) and FGN Bond coupon payments (N17.87 billion) kept the financial system afloat with liquidity.
Accordingly, the average system liquidity this week settled at a net long position of N339.93 billion, relative to the net short position of N29.89 billion in the prior week.
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