SAT, 01 OCT, 2022-theGBJournal| Nigeria’s FX reserves continued its decline, falling by US$178.56 million w/w to US$38.28 billion (29 September).
Across the FX window, the naira depreciated by 0.2% to N437.03/US$ at the I&E window (IEW) and was flat at NGN712.00/USD at the parallel market.
At the IEW, total turnover (as of 29 September) declined by 1.4% WTD to US$520.32 million, with trades consummated within the NGN410.00 – N453.15/USD band.
In the Forwards market, the naira depreciated at the 1-month (-1.7% to N446.77/USD), 3-months (-2.0% to N453.14/USD), 6-months (-2.2% to N467.92/USD) and 1-year (-2.3% to NGN495.21/USD) contracts.
Meanwhile at the money market, the overnight (OVN) rate remained double-digit and expanded by 100bps w/w to 16.0%. This week’s expansion can be attributed to the debits for net NTB issuances (N37.98 billion) and the additional CRR debits in line with the new CRR levels, outweighing the inflow from FAAC disbursement c. (N400.00 billion) and bond coupon payments (N38.36 billion).
Notwithstanding, we highlight that the average liquidity level for the week settled higher at a net long position of N182.97 billion (vs net short position of N26.87 billion in the previous week).
We expect system liquidity to be pressured in the coming week. We believe the outflows for weekly auctions (OMO & FX) will outweigh the anticipated inflows from OMO maturities (NGN60.00 billion). Thus, we expect the OVN rate to trend northwards.
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