SAT 16 JAN, 2021-theGBJournal- Nigeria’s FX reserves maintained its accretion for the fourth consecutive week, as the gross reserve position grew by USD363.61 million w/w to USD35.72 billion (13th January 2021).
Across the FX windows, the naira weakened against the US dollar by 0.3% w/w, to NGN394.67/USD at the I&E window, and by 0.6% to NGN475.00/USD in the parallel market. At the I&E window, total turnover at the I&E window increased by 59.9% WTD to USD330.67 million, with trades consummated within the NGN387.10 – 411.05/USD band.
In the Forwards market, the rate was flat in the 1-month (NGN398.04/USD) contract, weakened in the 3-month (-0.5% to NGN403.33/USD) contract and appreciated in the 6-month (+0.3% to NGN416.62/USD) and 1-year (+0.2% to NGN435.10/USD) contracts.
Given the expected pressure on the external reserves amid weak portfolio inflows, Cordros Research analysts say they expect the naira to depreciate closer to its fair value implied by long-run REER (NGN453.67) in the medium term.
‘’Our baseline expectation is that the CBN will depreciate the naira by 5.3% to NGN400/USD in the interbank market and 5.1% to NGN415/USD at the IEW.’’
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