Naira Skids Further at I&E FX Market on Demand Pressure, Year-End Activities…

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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.

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Also, the continued demand for the greenback sustained its pressure on the local currency following Nigerian banks’ resolve to ration FX spending limit for customers as well as the plan to halt useablility of the domestic cards for international transactions beging December 31, 2022.

At the investors and exporters’ FX window the
Naira skid for another week by N5 or 1.10% week
on week to close the week at N461.50 against the
greenback from N465.50/USD in the previous
week’s close after the rollout of banknotes by the CBN was graced by limited supply from banks to users who have plans in top gear heading into the new year and a possible currency stashing.

On the other hand, the exchange rate between the Naira and Dollar stayed in the positive region for the Naira 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 N737/USD from N741/USD last week as traders wait on the sidelines on the next move following deposit money banks’ move to FX spending limit.

Thus, market participants maintained bids between N457/USD and N468/USD at the I&E segment while at the open market, bids ranged between N735/USD and N743/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 mixed trend across most tenor gauges for the Naira Forward Contracts against the greenback as we saw appreciation in the Naira Forward Index value across the 1 month and 6 month tenors by 0.2% and 1.51% week on week to close at contract offer prices of N468.02/USD, and N497.60/USD.

Contrary, the 2 month, 3 month and 12 month forward contracts trended in a depreciating corner week on week by 0.82%, 0.96% and 0.30% to close at N476.11/USD, and N479.78/USD and N529.55/USD in that order.

In the just concluded week, we saw the Bonny light crude price bounced back by 0.24% or (USD0.2) week on week to close the week at USD82.28 per barrel from USD82.08 per barrel in the previous week.

Meanwhile, rising cases of covid from China is beginning to set the tone for overall sentiment for oil price

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