In the just concluded week, Naira appreciated against the USD at the Investors and Exporters FX Window (I&E FXW) by 0.04% to close at N386.33/USD as Bonny light crude price rose week-on-week by 2.34% to USD40.70 as at Thursday, June 25, 2020.
However, NGN/USD exchange rate rose (i.e Naira depreciated) by 1.57% and 1.10% to close at N452.00/USD and N460.00/USD respectively at the Bureau De Change and the parallel (“black”) markets.
At the Interbank Foreign Exchange market, NGN/USD closed flat at N358.51/USD, amid weekly injections of USD210 million by CBN into the foreign exchange market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for Invisibles.
Elsewhere, the Naira/USD exchange rate rose (i.e Naira depreciated) for most of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months rates increased by 0.11%, 0.23%, 0.31%, 0.65% and 1.38% respectively to close at N387.95/USD, N389.66/USD, N391.47/USD, N396.60/USD and N414.02/USD respectively.
However, spot rate was unchanged at N361.00/USD.
In the new week, we expect the Naira to depreciate against the USD, especially at the I&E FX Window amid declining external reserves.
Cowry Asset Research