Naira Appreciates Against USD Across FX Markets As New Banknotes Rollout Draws Near…

Date:

In the just concluded week, we saw the Naira experience another calm in demand in the foreign exchange market as Bureau De Change operators cut rates in a bid to attract users of the greenback just as we inch closer to the official date of the release of the redesigned Naira notes by
the CBN.

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Consequently, at the the open parallel market FX window the Naira strengthened further by N28 or 3.6% week on week to close the week at
N747/USD from N775/USD in the previous week’s close as currency users continue to dump the greenback.

Similarly, the Naira edged the dollar by N1 (0.22%) week on week at the importers and
exporters window to close the week at
N445.33 from N446.33/USD the previous
week as demand for the greenback took a
breather.

Thus, market participants maintained bids between N444/USD and N450/USD at the I&E segment while at the open market, bids ranged between N740/USD and N753/USD.

A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchained from the previous week as it closed the week at N445/USD from last week.

Also, our analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets, there was a bearish trend across tenors for the Naira Forward Contracts against the greenback as we saw depreciating of the Naira index across all tenors by 1.89%, 2.46%, 2.81%, 3.16% and 4.45% week on week across all tenor gauges to close the week at offer prices of N460.03/USD, N466.18/USD, N471.58/USD, N491.30/USD and N525.75/USD in that order.

Elsewhere, the Bonny light crude price dipped by 2bps week on week to close the week at USD87.40 per barrel (as at November 30,) from USD87.42 per barrel in the previous week.

This is emanating from the uncertainties around the global crude oil price in the face of latest updates on the covid-19 pressures in two cities of China and a steady US inventories.

Just as was witnessed in the last week, we see further appreciation across all FX segments as the date for new banknotes rollouts draws closer and barring any distortion in the market.

This appreciation is expected to continue as we head into the festive season despite the high momentum in campaign activities.

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