…Nigeria’s gross reserves level dropped by US$18.03 million w/w to close at US$33.35 billion
SAT, FEB 03 2024-theGBJournal| The local currency, the Naira, witnessed a substantial depreciation against the US Dollar this week at the Nigerian Autonomous Foreign Exchange Market Window (NAFEM)
It reached a historic intraday low of 1,462.00/$ at the NAFEM window, approaching its parallel-market rate of around N1,500.00/$1 following the Central Bank of Nigeria’s (CBN) revision of the exchange rate methodology.
Despite concerted efforts by the Central Bank and the Federal Government to bolster liquidity in the foreign exchange market, the Naira’s sharp depreciation persists.
The Central Bank also introduced a new policy on the Net Open Position (NOP) of banks, mandating them to ensure that the NOP limit of their overall foreign currency assets and liabilities does not exceed “20% short or 0% long of shareholders’ funds.”
This directive aims to prudently manage foreign exchange risks, prevent potential losses, and ensure accurate and timely reporting by financial institutions.
Overall, total turnover at the NAFEM window (as of 01 February 2023) fell by 4.9% WTD to US$429.46 million, as trades were consummated within the NGN701.00–N1,531.00/USD band.
In the Forwards market, the naira rates depreciated across the 1-month (-28.2% to N1,431.39/USD), 3-month (-28.2% to N1,461.88/US$), 6-month (-28.0% to N1,504.19/US$), and 1-year (-26.9% to N1,580.65/US$) contracts.
Meanwhile, this week, Nigeria’s FX reserves paused its accretion trend after five consecutive weeks, as the gross reserves level dropped by US$18.03 million w/w to close at US$33.35 billion (30 January).
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