The Naira skid across fx segments against the dollar as demand pressure resurfaced amidst lower fx supply to meet the unabating demand across the official and parallel markets.
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apex bank continue to show weak firepower to defend the local currency while market players anticipate the inflow of fx from the $3 billion emergency crude-oil fund from the NNPC Limited.
At the close of the week, the naira depreciated by 5.26% and 7.65% against the US dollar respectively, with official and parallel market rates closing at N778.42 and N915/$1 respectively.
This upturn was driven by factors such as limited foreign exchange supply from the CBN via the Investors and Exporters (I&E) window, heightened demand for the dollar which saw limited supply at the official market, leading to increased pressure at the
parallel market and speculation about potential CBN-led Naira devaluation.
Elsewhere at the FMDQ Securities Exchange (SE) FX Futures Contract
Market, the local currency was downbeat against the US dollar across contract tenors.
Notably, forward rates depreciated marginally by 0.94%, 0.86%, 0.85%, 0.76% and 0.84% respectively for the SEPT-2023, OCT-2023, NOV-2023
FEB-2024 and the AUG-2024 contract tenors, reaching to close at N790.80/$1, N800.21/$1, N809.63/$1, N838.09/$1 and N897.57/$1 as a result of sustained demand pressures across various tenors.
This week, oil price dynamics took the center stage and was headed for a weekly loss on the back of new oil flows entering
the market, but bullish fundamentals came to rescue, helping to stop any significant drop.
To this, the Brent Crude was up $84.40 per barrel on Friday and was followed by the WTI which traded at the $80 band per barrel.
Elsewhere, the price of the Nigerian Bonny Light crude oil closed positive on Friday at $88 per barrel on the back of tight global supply concerns and t he Fed rate hikes expectation.
In the coming week, Cowry Research anticipate the naira to trade in a relatively calm band at the various fx markets barring any distortions while the apex bank maintains its interventions to shore up the naira value.
However, as market await the staggered inflow of fx from the $3bn emergency crude-oil repayment loan from the Afrexibank into the market,
we anticipate that demand pressure will persist across fx segments and causing further depreciation of the naira against the g reenback.
