Naira Lost N0.08 w/w Against The Dollar On Rising Demand Pressure, Falling Oil Price…

0
217
Read audio

This week and just like every other weeks, FX rationing by currency traders is hitting a height as the FX mismatch between demand and supply of the greenback to the Naira remained elevated.

Consequently, the Naira depreciated by a marginal N0.08 (-0.02%) week on week to N436.33/USD at the Investors and Exporters’ FX segment from N436.25/USD the prior week.

This weakening against the greenback was excerbated by the continued declines in the price of crude oil for another straight week while Nigeria repatriates little or no profits from the oil market.

Thus, market participants maintained bids between N420/USD and N440.21/USD.

At the parallel market, the Naira traded flat to close the week at N712/USD week on week as FX demand stayed persistent for another week in the face of declining reserves and low earnings from crude oil exports.

Further afield, at the Interbank Foreign
Exchange Forward Contracts market, the spot
exchange rate trade was quiet to close the week
at N430.00/USD from last week’s close.

In the meantime, our analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets appreciated at the short and long tenor contracts respectively where we saw the 1 month, 2 months and 3 months forward contracts closing the week weaker from last week’s close.

Thus, they depreciated 0.78%, 0.86% and 0.94% to close at N439.24/USD, N441.53/USD and N444.21/USD respectively.

Also, the long (6 months and 12 months) tenor contracts further depreciated by 1.14% and 1.74% week on week to close at N457.57/USD and N484.03.USD respectively.

Elsewhere, the Bonny light crude price declined by $0.65 (-0.70%) w/w to close the week (Sept.21) at USD91.70 per barrel from USD92.35 per barrel in the previous week on the back of low demand.

Next week, we expect the Naira to trade relatively calm across all segments of the FX market in the face of growing dollar demand pressure for BTA and PTA respectively while the CBN continues its bi-weekly intervention in the FX market to save the Naira.