In the just concluded week, Naira depreciated further against the USD at the Bureau De Change (BDC) and parallel (“black”) markets by 3.13% and 2.32% respectively to close at N485/USD and N495/USD respectively. Also, the Naira depreciated at the Investors and Exporters Window by 1.15% to close at N390.25/USD despite the sustained rise in crude oil prices at the international market.
However, NGN/USD appreciated by 0.52% to close at N379/USD at the Interbank Foreign Exchange market 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 most of the foreign exchange forward contracts: 1 month, 2 months, 3 months and 6 months rates rose by 1.22%, 1.18%, 1.11%, 1.16% and 0.86% respectively to close at N390.28/USD, N390.33/USD, N390.38/USD, N390.57 and N391.44/USD respectively. However, the spot rate appreciated by 0.52% to close at N379.00/USD.
In the new week, we expect Naira/USD to further depreciate at most market segments against the backdrop of dwindling foreign exchange reserves (reserves fell week-on-week by 0.22% to USD35.42 billion as at Thursday) and liquidity ease (created by matured OMO bills) as investors further convert their naira to USD for speculative purposes as well as to invest in dollar-denominated assets such as Eurobonds which currently trade at relatively high yields.
