SAT, FEB 10 2024-theGBJournal| The naira depreciated by 2.3% N1,469.97/US$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) even as the total turnover (as of 08 February 2024) increased by 66.7% WTD to US$ 2.18 billion.
The rise in turnover follows banks compliance with the new macroprudential limit for net open positions, and amid the Central Bank of Nigeria’s (CBN) removing restrictions on IMTOs exchange rate quotes, interbank FX deal spreads and interbank sale of proceeds.
Analysts at Cordros Research believes that CBN’s updated policy on limiting banks’ foreign currency exposure will continue to support turnover in the NAFEM and improve supply to the market over the short-term.
Also, with significant gains made with regards to addressing the FX backlog, the potential for a more stable FX market seems possible.
However, meaningful appreciation of the currency is not anticipated until the apex authority ensures policy actions are further aligned to be frictionless, the frictionless policy actions are sustained, and it builds capacity to intervene within the market to limit volatility during periods of pressure.
Trades were consummated within the N830.00 – N1,550.00/USD range.
In the Forwards market, the naira rates across the 1-month (-2.5% to N1,467.81/USD), 3-month (-2.7% to N1,501.75/USD), 6-month (-2.6% to N1,544.63/USD), and 1-year (-3.9% to N1,643.94/USD) contracts were higher.
Meanwhile, this week, Nigeria’s FX reserves weakened further as the gross reserves level declined by US$182.02 million w/w to close at USD33.17 billion (05 February 2024).
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