Naira Depreciates Further Against USD at Most FX Windows…

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Nigerian naira banknotes are seen in this picture illustration, September 10, 2018. Picture taken September 10, 2018. REUTERS/Afolabi Sotunde/Illustration - RC15864538F0

In line with our expectations, Naira depreciated further against the USD at the Investors and Exporters FX Window (I&E FXW) by 0.26% to close at N389.50/USD.

Also, NGN/USD exchange rate rose (i.e Naira depreciated) by 0.87% and 0.43% to close at N466.00/USD and N472.00/USD respectively, at the Bureau De Change and the parallel (“black”) markets.

However, NGN/USD closed flat at N381/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by CBN into the forex 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 depreciated for all of the foreign exchange forward contracts, save the spot rate which closed flat at N381.00/USD.

However, 1 month, 2 months, 3 months, 6 months and 12 months rates rose (i.e depreciated) by 0.33%, 0.38%, 0.42%,
0.56% and 1.11% respectively to close at N391.38/USD, N393.26/USD, N395.16/USD, N400.14/USD and
N418.10/USD respectively.

We expect to see continued pressure on the local currency (the Naira/USD exchange rate) amid sustained
dwindling external reserves.

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