Naira Loses Against USD as CBN Devalues Official Rate to N381/USD

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In the just concluded week, Naira depreciated against the USD at the Investors and Exporters FX Window (I&E FXW) by 0.13% to close at N386.50/USD even as CBN devalued its official rate to N381/USD from N358.51/USD in line with the market-based autonomous foreign exchange window.

Also, NGN/USD exchange rate rose by 0.22% and 0.43% to close at N455.00/USD and N463.00/USD respectively at the Bureau De Change and the parallel (“black”) markets.

At the Interbank Foreign Exchange market, NGN/USD also rose by 6.27% to close at N381.00/USD amid weekly injections of USD210 million by CBN into the forex 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 invisible.

Elsewhere, the Naira/USD exchange rate depreciated for all of the foreign exchange forward contracts: spot rate, 1 month, 2 months, 3 months, 6 months and 12 months rates increased by 5.54%, 0.37%, 0.52%, 0.70%, 1.34% and 1.22% respectively to close at N381.00/USD, N388.64/USD, N390.37/USD, N392.20/USD, N398.22/USD and N413.10/USD respectively.

We commend moves by the monetary authority to unify the exchange rates in line with the autonomous foreign exchange rate. However, we may see further depreciation of the Naira against the USD in the new week if market players interpret the devaluation of the official rate as a sign of short term dollar scarcity.