…Nigeria’s FX reserve improved further this week as the gross reserve level increased
SAT, OCT 21 2023-theGBJournal|The value of the naira to the dollar depreciated by 568 bps to print at N808.27/$ this week at the Nigerian Autonomous Foreign Exchange Market (NAFEM).
Total turnover at the market (as of 19 October 2023) fell by 50.6% WTD to USD348.91 million, as trades were consummated within the N700.00 – N1,000.00/USD band.
In the Forwards market, the naira rates recorded depreciation across the 1-month (-2.1% to N805.92/USD), 3-month (-2.0% to N824.20/USD), 6-month (-1.7% to N852.67/USD) and 1-year (-2.2% to N919.65/USD) contracts.
Given the CBN’s unbanning of importers of all the 43 items previously restricted from the NAFEM in 2015, the market realised that FX supply is still minimal at the official market faster than we anticipated.
Accordingly, importers have returned to the parallel market to fulfil their FX obligations.
In addition, 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.
Nigeria’s FX reserve improved further this week as the gross reserve level increased by USD18.31 million w/w to USD33.24 billion (18 October).
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