SAT. 31 DEC, 2022-theGBJournal| Nigeria’s FX reserves recorded another accretion this week, increasing by US$122.40 million w/w to US$37.09 billion (29 December).
Meanwhile, the naira weakened against the dollar by 1.1% to N461.50/USD at the I&E window (IEW).
At the IEW, total turnover (as of 29 December 2022) decreased by 60.1% WTD to USD142.19 million, with trades consummated within the NGN440.00 – NGN478.18/USD band.
In the Forwards market, the naira appreciated at the 1-month (+0.2% to NGN468.02/USD) and 6-month (+1.5% to N497.60/USD) contracts, but depreciated at the 3-month (+1.0% to N479.78/USD) and 1-year (-0.3% to N529.55/USD) contracts.
We believe the FX liquidity issues will remain over the short-to-medium term in the absence of any positive signal that denotes an improvement in FX supply relative to the pre-pandemic levels.
This week, the overnight (OVN) rate contracted by 142bps, w/w, to 11.3%, as the financial system remained awash with liquidity from the prior week coupled with the inflow from OMO maturities (N30.00 billion) this week.
We highlight that system liquidity this week averaged a net long position of N550.15 billion (vs a net long position of N383.71 billion in the previous week).
In the first week of 2023, we envisage the OVN rate would trend upward as possible debits for CRR and CBN’s weekly (OMO & FX) auctions are likely to offset an expected sole inflow from OMO maturities (NGN10.00 billion).
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