SAT, 17 SEPT, 2022-theGBJournal| This week, Nigeria’s FX reserve recorded another decline, falling by US$228.63 million w/w to US$38.69 billion (15 September). Across the FX windows, the naira was flat at NGN436.25/USD at the I&E window (IEW) but depreciated by 0.1% to N709.00/USD at the parallel market.
At the I&E window, total turnover (as of 24 September) increased by 5.4% WTD to USD367.63 million, with trades consummated within the N414.00 – 452.17/USD band.
In the Forwards market, the rate was flat at the 1-month (NGN435.85/USD) contract, but appreciated at the 3-month (+0.1% to N440.08/USD) and 1-year (+0.1% to NGN475.74/USD) contracts. The rate depreciated at the 6-month (-0.1% to N452.42/USD) contract.
Meanwhile, in line with our expectations, the overnight (OVN) rate expanded by 117bps, w/w, to 10.2%, as outflows for CBN’s weekly auctions – OMO (N20.00 billion) & FX – outweighed the inflows from FGN bond coupon payment (N51.12 billion) and OMO maturities (NGN35.00 billion).
Notwithstanding, the average system liquidity level settled higher, at a net long position of NGN212.55 billion (vs a net long position of N78.72 billion in the previous week).
In the coming week, we expect system liquidity to tighten as the debit for FGN bond auction (N225.00 billion) may most likely overshadow the inflow from FGN bond coupon payment (N157.84 billion). Thus, we expect the OVN rate to trend upwards.
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