SAT. 24 DEC, 2022-theGBJournal| After fifteen consecutive weeks of decline, Nigeria’s FX reserves increased by US$13.47 million to USD36.95 billion (22 December 2022).
Meanwhile, the naira depreciated by 1.1% to N456.50/USD at the I&E window (IEW) but made significant gains against the green back at the parallel market. It traded at N735 and N742 /US$ with an average of N739.25/US$ Friday.
At the IEW, total turnover (as of 22 December 2022) declined by 19.3% WTD to US$692.08 million, with trades consummated within the N435.00 – N472.98/USD band.
In the Forwards market, the naira depreciated at the 1-month (-0.8% to N468.95/USD), 3-month (-0.9% to NGN475.22/USD), and 6-month (-1.2% to N505.22/USD) contracts.
Elsewhere, the naira appreciated at the 1-year (+1.7% to N527.97/USD) contract.
Meanwhile, the overnight (OVN) rate expanded by 225bps to close this week at 12.8% despite the ample liquidity in the financial system.
Notably, the average system liquidity settled higher this week at a net long position of NGN383.71 billion (vs a net long position of NGN108.31 billion) supported by inflows from FAAC allocation (c. NGN540.00 billion) and OMO maturities (NGN5.00 billion).
Next week, we believe the OVN rate will trend upward from current levels following the expectations that debit for (NTB, OMO & FX) auctions will offset the sole inflow from OMO maturities (NGN30.00 billion).
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