SAT. 18 MARCH 2023-theGBJournal | This week, Nigeria’s FX reserves decreased by USD311.24 million w/w to USD36.08 billion (15 March).
The naira depreciated by 0.1% to N462.83/USD at the I&E window (IEW), with total turnover at the window (as of 16 March 2023) decreasing by 22.2% WTD to USD431.12 million, as trades were consummated within the NGN445.96 – NGN476.96/USD band.
In the Forwards market, the naira rates appreciated across the 1-month (+0.2% to N465.63/USD), 3-month (-+0.1% to NGN481.90/USD), and 6-month (+0.5% to N506.17/USD) contracts, but depreciated at the 1-year (-1.1% to NGN548.84/USD) contract.
We believe FX liquidity issues will remain over the short-to-medium term as we do not see any positive signal that denotes an improvement in FX supply relative to the pre-pandemic levels.
Meanwhile, In line with our expectations, the overnight (OVN) rate expanded by 299bps w/w to 13.8%, as the debits for banking sector CRR alignments offset the inflow from FGN bond coupon payments (N128.40 billion).
We highlight that the average system liquidity this week settled at a net long position of N331.98 billion (vs a net long position of N294.52 billion in the previous week). We note that this week’s average system liquidity does not reflect today’s CRR debits.
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