SAT, JULY 29 2023-theGBJournal |Nigeria’s FX reserve declined by US$19.20 million w/w to US$33.95 billion (26 July).
Meanwhile, the naira appreciated by 0.3% to N775.76/US$ at the I&E window (IEW).
At the IEW, total turnover (as of 27 July 2023) declined by 18.1% WTD to US$343.06 million, with trades consummated within the N650.00 – N869.00/USD band.
In the Forwards market, the naira appreciated across the 1-month (+2.9% to N773.68/US$), 3-month (+2.9% to N784.86/US$), and 6-month (+2.3% to N807.08/US$) contracts.
Meanwhile, the naira closed flat at the 1-year (N859.61/USD) contract.
We expect the currency pressures to remain intact in the near term, given seasonal-induced demand and still frail FX supply despite the CBN’s abolishment of its multiple FX windows.
On FX supply, we expect foreign investors to remain on the sidelines in the near term, looking for signals on market interest rates and CBN’s plans to start clearing the existing FX backlogs and boosting FX supply to support the market in the near term.
In the money market, just as envisaged, the overnight (OVN) rate contracted by 19.6% w/w to 1.4%, as the system liquidity was supported by inflows from FAAC disbursement (N561.49 billion) and FGN bond coupon payments (N126.00 billion).
Consequently, the average system liquidity closed higher at a net long position of N363.38 billion (vs a net long position of N103.19 billion in the prior week).
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