Naira Down Across FX Markets on CBN’s Currency Redesign Announcement…

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With the recent annoucement by Nigerian apex bank to curb activities of currency speculators and illegal trading of the naira, it has opted for a redesign as a bid to salvage the image of the legal tender and prevent the rate at which the currency gets mutilted in the hands of indivduals.

To this, the Naira lost by 0.70% (N3.08) week on week against the greenback at the Investors and Exporters’ FX window to close the week at N444.75/USD from N441.67/USD.

In the same vein, at the parallel market the pressure continues for another week as the locasl currency bowed to pressure; losing by 3.1% week on week to close at N770/USD from N747/USD in the
prior week as we begin to approach festivities coupled with the announcement from the CBN on redesigning the local currency.

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 N765 and N780 per dollar as market reacts to the news by the apex bank.

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 depreciated across all tenor contracts.

Consequently, the 1 month tenor contract declined 0.47% week on week to close at N449.45/USD from N447.36/USD last week.

Also, we saw the 2 months, 3 months, 6 months and 12 months Naira forward contracts following the same trend by 0.45%, 0.98%, 1.08% and 0.81% in that order to close the week at N452.81/USD, N458.75/USD, N476.53/USD and N501.04/USD respectively.

Elsewhere, the Bonny light crude price appreciated by $2.61 (2.8%) w/w to close the week at USD96.23 per barrel as at October 27, from USD93.62 per barrel in the previous week.

Next week, we expect the Naira to trade in a relatively calm manner.

However, the news on the redesigning of the legal tender is expected to drive activities across market segments as traders and users will look to offload their holdings for more of the greenback as means to hedge against further devaluations.