SAT, 13 AUG, 2022-theGBJournal| This week, Nigeria’s FX reserves decreased by USD166.49 million w/w to USD38.88 billion (11 August). Across the FX windows, the naira weakened against the dollar by 0.3% to NGN429.63/USD at the I&E window (IEW) and by 2.2% to NGN675.00/USD at the parallel market.
At the IEW, total turnover (as of 11 August 2022) decreased by 38.0% WTD to USD325.60 million, with trades consummated within the N415.00 – N444.00/USD band. In the Forwards market, the naira depreciated at the 1-month (-0.1% to NGN429.51/USD) and 1-year (-0.6% to N482.24/USD) contracts, but appreciated at the 3-month (+0.1% to NGN438.51/USD) and 6-month (+2.0% to N452.24/USD) contracts.
Meanwhile, this week, the overnight (OVN) rate contracted by 2.00ppts w/w to 13.0%, despite the tepid funding conditions in the system amid inflow from OMO maturities (N5.00 billion).
We estimate that system liquidity this week averaged a net short position of NGN20.82 billion (vs a net long position of N98.45 billion in the previous week).
We expect the OVN rate to tilt upward next week, as the N100.00 billion expected from OMO maturities may not be sufficient to offset the outflows from CBN’s auctions (FGN Bond, OMO and FX).
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