SAT. 11 FEB, 2023-theGBJournal| This week, Nigeria’s FX reserves declined by USD167.87 million w/w to USD36.82 billion (08 February 2023) – the lowest level since September 2021 (US$36.78 billion).
Meanwhile, the naira appreciated by 0.1% to N461.50/USD at the I&E window (IEW), with total turnover at the window (as of 09 February 2023) declining by 46.1% WTD to USD292.76 million, as trades were consummated within the N416.00 – N478.18/USD band.
Inflows into the Investors & Exporters Window (IEW) declined by 54.1% m/m to US$847.20 million in January after hitting a 12-month high in December 2022 (USD1.85 billion).
On the one hand, foreign investors remain on the sidelines as the lingering FX illiquidity bites harder amidst the lack of FX reforms and weak domestic macro narrative.
Thus, inflows from foreign investors settled at US$114.00 million (December: 109.80 million). On the other hand, inflows from the local sources (-57.8% m/m to US$733.20 million) settled at a 4-month low as supply dipped across all the different local segments (Non-bank corporates: -62.1% m/m | Exporters: -56.1% m/m | CBN: -15.8% m/m | Individuals: -67.7% m/m).
In the Forwards market, the naira rates recorded for the 1-month (-1.1% to N488.77/US$) and 1-year (-8.0% to N529.62/US$) contracts declined, but increased for the 3-month (+0.6% to N486.65/US$) and 6-month (+0.3% to N504.45/US$) contracts.
Meanwhile, the overnight (OVN) rate was flat through the week before eventually expanding by 6bps to 11.1%, as the debits for CRR and net NTB issuances (N200 billion) outweighed the inflow from OMO maturities (N38.53 billion). As a result, the average system liquidity settled lower at a net long position of N452.55 billion (vs a net long position of N919.76 billion in the previous week).
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