SAT, APRIL. 29 2023-theGBJournal| This week, Nigeria’s FX reserve declined by US$47.83 million w/w to close at US$35.26 billion (26 April) as FX liquidity issues persist.
Analysts say there are still no positive signal that denotes an improvement in FX supply relative to the pre-pandemic levels.
Moreover, considering the tepid accretion to the reserves given low crude oil production and elevated PMS under-recovery costs, FPIs who have historically supported supply levels in the IEW will be needed to sustain FX liquidity levels in the medium to long-term.
Meanwhile, the naira appreciated by 0.1% to N463.00/US$ at the I&E window (IEW), with total turnover at the window (as of 27 April 2023) decreasing by 26.9% WTD to US$314.73 million, as trades were consummated within the N415.00 – N478.57/US$ band.
In the Forwards market, the naira rates depreciated on the 1-month (+0.2% to N469.74/USD), 3-month (-1.3% to NGN496.22/USD), 6-month (-1.9% to N526.22/USD) and 1-year (-0.8% to N560.79/US$) contracts.
At the money market this week, the overnight (OVN) rate contracted by 587bps, w/w to 13.1%.
We note that the rate was depressed through the week, following the inflows from the maturing APR-2023 bond (N735.96 billion), FAAC disbursements (N438.49 billion), and FGN bond coupon payments (N178.50 billion).
Evidently, the average system liquidity closed at a net long position of N610.22 billion (vs a net short position of N338.33 billion in the previous week).
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