SAT 30 OCT, 2021-theGBJournal- The accretion to Nigeria’s FX reserves continued this week following the inflows from IMF SDR and FCY borrowings. Precisely, the gross reserves position closed higher by USD636.61 million w/w to USD41.75 billion (26th October 2021).
Meanwhile, the naira was flat w/w at NGN415.10/USD at the I&E window (IEW) but appreciated by 1.1% w/w to NGN565.00/USD at the parallel market. At the IEW, total turnover (as of 28th October 2021) declined by 17.5% WTD to USD702.24 million, with trades consummated within the NGN404.00 – 453.15/USD band. In the Forwards market, the rates on the 1-month (-0.2% to NGN416.67/USD), 3-month (-0.8% to NGN424.47/USD), 6-month (-0.8% to NGN446.53/USD), and at the 1-year (-0.1% to NGN446.53/USD) contracts reflected depreciations relative to the greenback.
We expect improved liquidity in the IEW over the medium term, given our expectation of increased oil inflows in line with the rise in crude oil prices and inflows from FCY borrowings (USD6.18 billion) and IMF SDR (USD3.40 billion). Accordingly, we expect the naira to remain relatively range-bound (NGN410.00/USD – NGN415.00/USD) at the IEW.
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