…Nigeria’s FX reserve recorded another accretion this week for the third consecutive week
…At the money market, during the past week, interbank market rates showed an upward trajectory
SAT, OCT 28 2023-theGBJournal|The value of the Naira to the dollar appreciated by 227 bps week-on-week to print at N789.94/$ this week at the Investors and Exporters FX Window, with total turnover at the market (as of 26 October 2023) decreasing by 16.0% WTD to USD361.09 million.
Trades were consummated within the N644.00 – N981.00/USD band. In the Forwards market, the naira rate depreciated across the 1-month (-3.4% to N834.18/USD), 3-month (-3.1% to N850.71/USD), 6-month (-2.7% to N876.57/USD), and 1-year (-1.5% to N933.51/USD) contracts.
However, the incentives for holding the naira continue to be limited by the day, coupled with the panic-buying arising from the expectations of further currency pressures amidst limited FX supplies.
Consequently, barring any significant FX inflows or convincing action by the policymakers to turn the tide, we expect the exchange rate pressures to linger in the short term.
Meanwhile, Nigeria’s FX reserve recorded another accretion this week for the third consecutive week, as the gross reserve level appreciated by USD51.97 million w/w to USD33.31 billion (25 October).
At the money market, during the past week, interbank market rates showed an upward trajectory, primarily driven by liquidity constraints resulting from CRR debits and the settlement of NTB auctions.
Additionally, the recent policy change by the Central Bank of Nigeria, which removed the cap at the SDF window, continued to exert upward pressure on interbank rates.
As a result of these factors, the Open Buy Back rate (OBB) saw a substantial week-over-week increase of 1,290 bps, reaching its peak at 14.40%. Simultaneously, the Overnight rate (O/N) experienced a significant rise of 1,255 bps, reaching 14.75%.
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