SAT, 19 DEC, 2020-theGBJournal- Nigeria’s FX reserves decreased by $132.06 million w/w to $34.84 billion, as outflows for CBN’s interventions across the various FX windows outpaced inflows into the reserves.
Across the windows, the naira remained flat against the US dollar at N394.00 in the I&E window (YTD: -7.5%), while it weakened by 0.4% to NGN477.00/USD in the parallel market (YTD: -24.1%).
In the Forwards market, the naira strengthened in the 1-month (+0.1% to N397.81/USD) and 1-year (+0.3% to N434.22/USD) contracts, while it weakened in the 3-month (-0.1% to N404.99/USD) and 6-month (-0.1% to N415.16/USD) contracts.
Given the expected pressure on the external reserves amid weak portfolio inflows, Cordros Research analysts 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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