SAT, 16 JULY, 2022-theGBJournal| Nigeria’s FX reserves sustained its accretion, as it grew by US$75.44 million w/w to US$39.43 billion (14 July 2022).
Across the FX windows, the naira depreciated by 1.0% and 0.2% to NGN430.33/USD and NGN618.00/USD at the I&E window (IEW) and parallel market, respectively.
At the I&E window, total turnover (as of 14 July 2022) decreased by 73.2% WTD to USD149.07 million, with trades consummated within the NGN411.42 – NGN444.00/USD band.
In the Forwards market, the rate was flat at the 1-month (NGN427.37/USD) contract, but weakened at the 6-month (-0.1% to NGN449.55/USD) and 1-year (-0.2% to NGN472.81/USD) contracts. The rate appreciated at the 3-year (+0.1% to NGN435.17/USD).
Although the CBN has enough liquidity to support the FX market over the short term, we highlight that foreign inflows are paramount for sustained FX liquidity over the medium term. Considering the tepid accretion to the reserves given the low crude oil production level and elevated PMS under-recovery costs, FPIs which have historically supported supply levels in the IEW will be needed to sustain FX liquidity levels in the medium to long term.
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