Nigeria’s Naira Shed N1.50 Against The Dollar At the I&E Segment As Demand Pressure Persist…

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With the continued pressure from the unabating
dollar FX demand by users within the manufacturing and trade (Import and Export) sectors coupled with rising demand for BTA and PTA, the Naira depreciated by N1.50 (-0.35%) w/w against the dollar from last week’s close of N428.13/USD to N429.63/USD at the I&E FX segment.

At the parallel market segment, the pressure continues on the local currency from last week after last week’s ease as the Naira lost strength by 3.33% w/w or N22 to close at N682/USD from N660/USD last week.

Elsewhere, 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.

In the meantime, the Naira/USD exchange rate traded mix as the 1M, 2M and 12M foreign exchange forward contracts cleared higher by 0.05%, 0.06%, and 0.64% respectively to close the week at N429.51/USD, N434.12/USD, and N482.24/USD in that order while the 3M and 6M Forward Contracts tapered by 8bps and 194bps to close the week’s offering at N438.51/USD and N452.54/USD in that order.

Elsewhere, the Bonny light crude price declined 3.33% w/w to close the week (Aug. 9) at USD112.25 per barrel from USD108.63 per barrel in the previous week.

Next week, we expect the Naira to trade in a relatively calm manner band across all segments barring any significant market distortions as the CBN continues its weekly FX market interventions.