…Nigeria’s FX reserve fell further this week as the gross reserve level decreased by USD168.42 million w/w to USD33.00 billion
SAT, DEC 02 2023-theGBJournal|The naira depreciated by 14.3% to N927.19/USD at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday as pressure on the local currency to persist.
At the NAFEM, total turnover (as of 30 November 2023) declined by 30.0% WTD to USD481.03 million, with trades consummated within the N700.00 – N1159.00/USD band.
FMDQ data shows that total inflow increased by 15.6% m/m to USD1.43 billion in November (October: USD1.23 billion) attributed to higher inflows across local (81.5% of total transactions) and foreign sources (18.5% of gross transactions) in the period.
Analyzing the breakdown, inflows from local sources increased by 8.2% m/m to USD1.16 billion in November (October: USD1.07 billion) driven by higher accretions from Individuals (+27.3% m/m), Non-Bank Corporates (+13.2% m/m) and Exporters (+3.8% m/m) segments, without any inflow from the CBN.
Simultaneously, collections from foreign sources surged by 65.8% m/m to USD263.20 million (October: USD158.70 million), although still significantly below the pre-pandemic level (Q1-20 average: USD1.28 billion).
Meanwhile, in the Forwards market, the naira rate recorded appreciation across the 1-month (+4.0% to N875.84/USD), 3-month (+5.7% to N890.29/USD), 6-month (+8.2% to N910.27/USD), and 1-year (+7.1% to N960.14/USD) contracts.
Looking ahead, we expect FX liquidity conditions to remain tight, pending receipt of expected FX inflows.
Thus, we expect the pressure on the local currency to persist in the near term. Nonetheless, we expect foreign investors to keenly watch the development in the FX space with regards to the expected FX inflows as guided by the authorities, Cenral Bank of Nigeria’s recent actions in clearing its FX backlogs, and firm direction of short-term interest rates.
Nigeria’s FX reserve fell further this week as the gross reserve level decreased by USD168.42 million w/w to USD33.00 billion (30 November) – the lowest point since 06 October 2017.
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