WeekAheadFX: Naira seen appreciate against Dollar as CBN sustains interventions

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In the just concluded week, the local currency remained unchanged at the Investors & Exporters Forex Window (I&E FXW) at N360.65.

Also, at the Interbank Foreign Exchange market, NGN/USD was flat at N356.46/USD amid weekly injections of USD210 million by CBN into the foreign exchange market via the Secondary Market Intervention Sales (SMIS), of which: USD100 million was allocated to Wholesale SMIS, USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.

Similarly, Naira remained unchanged against the US dollar at both the Bureau De Change (BDC) and the parallel (‘black’) market segments at N358/USD and N360/USD respectively.

Meanwhile, the Naira/USD exchange rate moderated for most of the foreign exchange forward contracts – 1 month, 2 months, 3 months, 6 months fell (i.e. Naira appreciated) by 0.01%, 0.03%, 0.08% and 0.07% to close at N363.41/USD, N366.15/USD, N368.85/USD and N381.08/USD respectively.

On the flip side, spot rate and 12 months rate rose (i.e. Naira depreciated) by 0.02% and 0.13% to close at N306.95/USD and N404.10/USD In the new week, we expect appreciation of the Naira against the USD in most market segements, especially at the I&E FXWindow as CBN sustains its special interventions amid sustained accretion to external reserves.

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