Naira Lost Strength Against The Dollar At the Streets As Demand-Supply Mismatch Lingers…

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In the just concluded week, the Naira plunged further by (-1.33%) N9 to N686/USD from N677/USD at the parallel market as the misery continues for the legal tender which grapples for strength against the greenback due to existing demand and supply mismatch.

However, it was a positive outing at the I&E Window as there was an appreciation by (+0.14%) N0.58 w/w to close the week at N429.05/USD from N429.63/USD the previous week.

Thus, most participants maintained bids between N417/USD and N444/USD.

At the Interbank Foreign Exchange market, NGN/USD closed flat at N430.00/USD amid CBN’s weekly injections of USD210 million where 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 in a mixed bag as the 1M and 6M FX Forward Contracts weakened further by a marginal 0.01% and 0.06% respectively to close the week at N429.54/USD and N452.82/USD.

On the other hand, the 2M, 3M and 12M Forward Contracts increased in value by 3bps, 23bps and 22bps to close the week’s offering at N434.00/USD, N437.51/USD and N481.17/USD in that order.

Elsewhere, the Bonny light crude price declined 2.59% w/w to close the week at USD111.44 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.