SAT, SEPT 02 2023-theGBJournal |Nigeria’s FX reserves recorded its first accretion after sixteen consecutive weeks of decline, as the gross FX reserves increased by US$224.39 million w/w to close at US$33.95 billion (31 August).
In the same vein, the naira appreciated by 5.1% to N740.38/USD at the I&E window (IEW), with total turnover at the window (as of 31 August 2023) decreasing by 12.1% WTD to US$367.47 million, as trades were consummated within the N701.00 – N800.00/USD band.
In the Forwards market, the naira rates recorded for the 1-month (-0.1% to N791.85/USD), 3-month (-0.3% to N812.06/USD, 6-month (-0.6% to N842.73/USD), and 1-year (-1.2% to N907.97/USD) contracts decreased.
While we understand that the NNPC’s crude repayment facility with the African Export-Import (AFREXIM) bank may have been put on hold, we highlight that there have been no further positive news flows regarding other measures to stem the slide of the naira.
The preceding, in addition to the lingering low crude oil production and foreign investors remaining on the sidelines, are expected to weigh on FX supply in the near term.
Consequently, we expect FX liquidity constraints to linger in the short term, ensuring the local currency pressures remain intact.
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