SAT, 03 SEPT, 2022-theGBJournal| Nigeria’s FX reserves sustained its ascent, as it grew by US$68.23 million w/w to US$39.02 billion (as of 31 August).
Across the FX windows, the naira weakened against the dollar in the I&E window by 0.3% to NGN431.50/USD but stayed flat at N700.00/US$ at the parallel market. At the IEW, total turnover (as of 1 September) increased by 2.9% WTD to US$655.74 million, with trades consummated within the N417.00 – N447.48/US$ band.
In the Forwards market, the naira depreciated at the 1-month (-1.3% to NGN434.44/USD), 3-month (-0.9% to NGN440.19/US$), and 6-month (-0.3% to N452.58/US$) contracts; but appreciated at the 1-year (+0.2% to N477.74/US$) contract.
Meanwhile, the overnight (OVN) rate maintained a downtrend through the week and eventually settled 117bps lower, w/w, at 12.5% on improved system liquidity.
The average system liquidity level for the week settled at a net long position of N352.31 billion (vs a net short of N70.07 billion in the previous week) as inflow from July FAAC disbursement (c. NGN490.00 billion) offset outflows for FX retail and OMO (NGN50.00 billion) auctions.
In the coming week, we expect the OVN rate to trend northwards as outflows for CBN’s weekly auctions and arbitrary CRR debits, if any, are likely to pressure system liquidity.
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