This week, the foreign exchange market players were in high anticipation for the rollout of the newly redesigned banknotes as announced by the CBN which is expected to be in circulation effective December 15 but, several lawmakers have called for an extension of the January 31, 2023 deadline set by the apex bank to enable the depositions by all.Thank you for reading this post, don't forget to subscribe!
However, irrespective of the recent development, there was a minimal rate of calm across FX segments.
At the investors and exporters’ FX
window the Naira skid for another week
by N5.12 or 1.2% week on week to close
the week at N451.50 from N446.50/USD
in the previous week’s close amidst the
higfh expectation for the rollout of the
newly redesigned CBN banknotes as
currency users renew their demand ahead
of the festivities.
On the other hand, the exchange rate between the Naira and Dollar stayed in the positive region for the Niara from the previous week’s close at the open parallel market window to close with a 0.27% or N2 gain to N745/USD from N747/USD last week as traders wait on the sidelines on the next move following CBN’s policy on naira withdrawal limit last week.
Thus, market participants maintained bids between N442/USD and N455/USD at the I&E segment while at the open market, bids ranged between N743/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 depreciation in the Naira index value across all tenors by 1.10%, 1.09%, 0.25%, 1.98%s and 2.95% week on week to close at offer prices of N465.10/USD, N470.67/USD, N471.04/USD, N499.04/USD and N536.84/USD in that order.
The oil market now looks set to another time of weekly gains since October in the face policy rate hikes by major central banks and the supply disruption concerns plus the recovery hopes from China’s oil demand.
In the just concluded week, we saw the Bonny light crude price bounced back by 12.75% or (USD9.57) week on week to close the week at USD84.65 per barrel from USD75.08 per barrel in the previous week.
Meanwhile, oil benchmarks’ positive rally has been buoyed by sentiments on potential tightenings which is expected to drive growth even in the coming year.
Next week, we expect the newly redesigned banknotes to gradually hit the system ahead of the festive preparations while the naira will witness demand pressure across all FX segment.
The jury is out to watch as we begin to see the multiplier effect of the policy across facets of the economy.