SAT AUG 17 2024-theGBJournal|The naira depreciated by 0.4% w/w to N1,579.89/US$ at the Nigerian Autonomous Foreign Exchange Market (NAFEM) as the total turnover (as of 15 August) at the market declined by 11.8% WTD to USD756.54 million, with trades consummated within the N1,495.00/USD – N1,607.50/USD range.
In the forwards market, the naira rates on the 1-month (+0.5% to N1,614.75/USD) and 6-month (+1.1% to N1,754.29/USD) contracts increased but decreased at the 3-month (-0.2% to N1,687.74/USD) and 1-year (-2.3% to N2,004.63/USD) contracts.
Whilst FX liquidity tightened during the week, the naira traded with less volatility due to waning demand pressure following the CBN’s FX retail auction last week.
Analysts at Cordros Research projects that the naira may remain pressured in the interim due to limited inflows from the CBN and weak FPI flows.
Meanwhile, Nigeria’s FX reserves decreased by US$301.32 million w/w to US$36.53 billion (15 August) following the CBN’s intervention through last week’s Retail Dutch Auction (RDAS).
However, the Debt Management Office (DMO) is set to issue a Domestic FGN US Dollar Bond on 19 August with an offer of USD500.00 million.
We highlight that the successful issuance of the bond will boost the external reserves, supporting the CBN’s ability to stabilise the naira in the medium term.
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