Green Back Edges against The Naira Across FX Segment As Dollar Demand Intensifies…

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In the just concluded week, the Naira lost by 0.07% (N0.29) week on week at the Investors and Exporters’ FX window to close the week at N441.67/USD from N441.38/USD as the local currency continues to lose strength from pressured demand while some commercial banks are now placing restrictions on total FX accessible by users for PTA and BTA purposes.

In the same vein, at the parallel market the pressure continues for another week as the locasl currency bowed to pressure and closing the week at N747/USD from N739/USD in the prior week.

As we draw closer to the election year and with the campaign activities by political parties taking full gear already, it is expected that the demand for the greenback will buoy further weakening of the legal tender.

Thus, as we witnessed, market participants maintained bids between N440/USD and N470/USD at the I&E Market and then the currency traders across the streets markets sold the greenback between N740 and N750 per dollar.

At the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate traded quietly as it closed the week at N430/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 across all tenor contracts.

Consequently, the 1 month tenor contract priced appreciated .21% week on week to close at N447.36/USD from N448.30/USD last week.

Also, we saw the 2 months, 3 months, 6 months and 12 months Naira forward contracts appreciating by 0.19%, 0.25%, 0.34% and 0.20% in that order to close the week at N450.78/USD, N454.29/USD, N471.43/USD and N497.03/USD respectively.

Elsewhere, the Bonny light crude price appreciated by $5.43 (0.60%) w/w to close the week at USD93.62 per barrel as at October 20, from USD95.06 per barrel in the previous week

Next week, we expect the Naira to trade relatively in the same band across all segments of the FX market barring any market distortions as the recent decision by OPEC+ gradually permeate the global oil market and tickle own on Nigeria’s reserves with positive effect on the local currency.