SAT, MAR 23 2024-theGBJournal|The local currency, the naira appreciated by 12.0% to N1,431.49/US$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM), as the apex bank intervened in the market thrice within the week with total sales of US$195.00 million.
At the NAFEM, total turnover (as of 21 March 2024) increased by 16.4% WTD to US$1.21 billion, with trades consummated within the N1,300.00 – N1,640.00/US$ band.
In the Forwards market, the naira rates recorded appreciation across the 1-month (+9.6% to N1,460.81/USD), 3-month (+9.4% to N1,500.26/US$), 6-month (+8.4% to N1,562.99/US$) and 1-year (+6.5% to N1,705.82/US$) contracts.
Nigeria’s FX reserve paused its five-week accretion trend this week as the gross reserves level decreased by US$96.41 million w/w to US$34.32 billion (20 March).
We note the Central Bank of Nigeria (CBN)’s increased intervention in the FX market this week, including the payment of the last portion of the FX backlogs – US$1.50 billion and the commencement of retail sales of US dollars to banks within the range of N1,300.00/US$ – N1,400.00/US$ to boost confidence in the FX market and stabilise the naira.
While the CBN is expected to continue its FX intervention in the near term, we do not expect a substantial increase in FX liquidity due to the relatively weak FX reserves.
However, barring any notable shocks, the reduced currency speculation and improved FPI inflows due to high naira yields may continue to strengthen the local currency in the near term.
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