Naira Reacts to CBN Rates Hike; Depreciates by N41 w/w against USD to N660/$1 at Parallel Window…

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In the just concluded week, the Naira
appreciated by N7.33 (1.70%) w/w against
the dollar from last week’s price of
N430.33/USD to close the week at N423/USD at the I&E FX Window due to eased pressure on the dollar.

However, there was negative reaction to the comments of the CBN Governor during the week which prompted a 6.62% (N41.00) w/w depreciation of the Nairaagainst the greenback at the Parallel market to close at N660/USD from N619/USD in the prior week.

At the Interbank Foreign Exchange market, NGN/USD closed flat at N430.00/USD amid CBN’s weekly injections of USD210 million: 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.

Meanwhile, the Naira/USD exchange rate closed in the mixed bag last week for all the foreign exchange forward contracts.

Specifically, 1 month and 3 months contracts gained 0.01%b and 0.08% respectively to close at N427.40 and N435.50 while the 2 months, 6 months and 12 months contracts dipped by 0.12%, 0.32% and 0.23% week on week in that order to close at N431.62/USD, N448.09/USD, and N471.71/USD in that order.

Elsewhere, the Bonny light price climbed higher by $4.27 to close the week at USD120.36 from USD116.09 per barrel in the previous week.

In the new week, we expect the local currency to trade relatively calm against the greenback barring market distortions while the CBN continues its weekly FX market interventions