SAT, SEPT 09 2023-theGBJournal |The Naira went wobbly during the course of the week’s trading session, but turned around to show signs of life against the U.S dollar.
At the I&E window, the local currency appreciated by 2.5% to N722.39/US$, with total turnover at the window (as of 07 September) decreasing by 63.3% wtd to US$292.02 million as trades were consummated within the N588.00 – N807.15/USD band.
In the Forwards market, the naira rate appreciated on the 1-month (+1.4% to N780.80/US$), 3-month (+1.6% to N799.42/USD), 6-month (+1.8% to N827.77/US$) and 1-year (+2.2% to N888.07/USD) contracts.
Meanwhile, Nigeria’s FX reserve declined this week, as the gross reserve position fell by US$181.45 million w/w to close at US$33.39 billion (06 September 2023).
While it is understood that the NNPC’s crude repayment facility with the African Export-Import (AFREXIM) bank may have been put on hold, analysts highlight that there have been no further positive news flows regarding other measures to stem the slide of the naira.
”The preceding, in addition to the lingering low crude oil production and foreign investors remaining on the sidelines, are expected to weigh on FX supply in the near term,” says Cordros Research analysts.
”Consequently, we expect FX liquidity constraints to linger in the short term, ensuring the local currency pressures remain intact,” they added
Again, there has been considerable attention on Nigeria’s actual foreign exchange situation.
The Acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, has announced a plan to address the $10 billion foreign exchange backlog in the coming two weeks, in collaboration with commercial banks.
He outlined that these outstanding foreign exchange obligations would be addressed using various structures within the forex market. This announcement led to an appreciation of the Nigerian Naira relative to the US dollar, both in the official and parallel markets.
Continuing on the topic of foreign exchange, the CBN, in its Q1’23 Economic Report, revealed that the net foreign exchange inflow into the economy witnessed a substantial quarter-on-quarter increase of 24.70%, rising from $5.78 billion in Q4’22 to $7.2 billion in Q1’23.
Furthermore, the net outflow through the Central Bank increased by 30% quarter-on-quarter, reaching $1.69 billion in Q1’23, up from $1.30 billion in the preceding quarter.
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