SAT, AUGUST 19 2023-theGBJournal |Nigeria’s FX reserves declined further this week, as the gross reserves level dropped by US$37.45 million w/w to close at US$33.83 billion (16 August).
Meanwhile, the naira closed flat at N740.67/USD at the I&E window (IEW), with total turnover at the window (as of 17 August 2023) increasing by 17.6% WTD to US$459.37 million, as trades were consummated within the N701.00 – N799.90/USD band.
In the Forwards market, the naira rates recorded for the 1-month (+1.4% to N783.46/USD), 3-month (+1.3% to N802.83/USD), 6-month (+0.8% to N831.80/US$), and 1-year (+0.9% to N890.12/USD) contracts increased.
We think the recent NNPCL’s emergency crude repayment loan from the African Export-Import (AFREXIM) bank is a favourable short-term fix in providing near-term FX supply to support the FX market and stabilise the local currency.
Nonetheless, we acknowledge that the amount is not sufficient to significantly support the local currency, more so that the funds will come in tranches.
Thus, if not adequately managed with other measures (such as higher interest rates and additional funding support from third parties or multilateral institutions), FX pressures may likely build up again, leading to another round of local currency depreciation.
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