This week in the foreign exchange market, it was a mixed bargain of activities for currency traders and speculators ahead of the year-end seasonality after the central bank made a policy amendment on the earlier imposed withdrawal limits and charges for corporates and individuals to N500,000 and N5 million from N100,000 and N500,000 weekly limits respectively.
Thus, reactions have trailed the move by the apex bank citing the move to be politically motivated.
At the investors and exporters’ FX
window the Naira skid for another week
by N5 or 1.11% week on week to close
the week at N456.50 against the
greenback from N451.50/USD in the
previous week’s close after the rollout
of banknotes by the CBN was graced by
limited supply from banks to users
ahead of year-end seasonality.
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 0.54% or N4 week on week gain to N741/USD from N745/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 N450/USD and N460/USD at the I&E segment while at the open market, bids ranged between N738/USD and N745/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 most tenor gauges for the Naira Forward Contracts against the greenback as we saw depreciation in the Naira index value across the 1 month, 2 month, 3 month and 6 months tenors by 0.83%, 0.34%, 0.89%, and 1.24% respectively to close at offer prices of N468.95/USD,
N472.26/USD, N475.22USD, and N4505.22/US. However, the long tenor contract with 1 year maturity gained by 1.65% week on week to close at N527/USD.
In the just concluded week, we saw the Bonny light crude price bounced back by 3.04% or (USD2.6) week on week to close the week at USD82.08 per barrel from USD84.65 per barrel in the previous week. Meanwhile, oil benchmarks’ recent positive rally now looks dented by sentiments on potential rate tightening by the Fed and rising cases of covid from China.
Next week, we expect to incresaed demand for the greenback as well as the local banknotes for the year-end seasonal activities.
However, the jury is out to watch as we begin to see the multiplier effect of the policy across facets of the economy.