SAT, 22 OCT, 2022-theGBJournal| This week, Nigeria’s FX reserves decreased by USD114.56 million w/w to USD37.68 billion (20 October).
Across the FX windows, the naira weakened against the dollar by 0.1% to NGN441.67/USD at the I&E window (IEW).
At the IEW, total turnover (as of 20 October) decreased by 6.4% WTD to US$282.42 million, with trades consummated within the N423.00 – N459.42/USD band.
In the Forwards market, the naira appreciated at the 1-month (+0.2% to NGN447.36/USD), 3-month (+0.3% to N454.29/USD), 6-month (+0.3% to N471.43/USD), and 1-year (+0.2% to N497.03/USD) contracts.
Meanwhile, the overnight (OVN) rate was flat at 16.5% on tighter system liquidity. Specifically, we highlight that the average liquidity level for the week settled lower at a net short position of N174.62 billion (vs net long position of N54.08 billion in the previous week) as debits for the FGN bond (N107.88 billion) and FX auctions outweighed the sole inflow from FGN bond coupon payments (N46.44 billion).
We expect the OVN rate to moderate from current levels next week. We believe the expected inflows from FGN bond coupon payments (N178.50 billion) and OMO maturities (NGN30.00 billion) would saturate and improve system liquidity.
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