Naira Gains Against USD at I&E FXW Despite Dwindling External Reserves…

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In the just concluded week, Naira appreciated against the USD at the Investors and Exporters FX Window (I&E FXW) by 0.09% to close at N386.00/USD despite the dwindling external reserves.

It fell week-on-week by 0.16% to USD36.16 billion as at Thursday, July 2, 2020.

However, NGN/USD exchange rate rose (i.e Naira depreciated) by 0.44% and 0.22% to close at N454.00/USD and N461.00/USD respectively at the Bureau De Change and the parallel (“black”) markets.

At the Interbank Foreign Exchange market, NGN/USD closed flat at N358.51/USD, amid weekly injections of USD210 million by CBN into the foreign exchange market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.

Elsewhere, the Naira/USD exchange rate fell (i.e Naira appreciated) for most of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months rates decreased by 0.20%, 0.34%, 0.51%, 0.92% and 1.42% respectively to close at N387.19/USD, N388.34/USD, N389.47/USD, N392.94/USD and N408.13/USD respectively.

However, spot rate was flattish at N361.00/USD.

In the new week, we expect the Naira to depreciate against the USD, especially at the I&E FX Window amid
declining external reserves.

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