Naira Weakens against the USD at Most FX Markets

In the just concluded week, Naira appreciated against the USD at the Investors & Exporters Window by 0.42% to close at N411.25/USD despite the external reserves declining w-o-w by 0.71% to close at USD33.28 billion as at July 1, 2021.

However, Naira continued to weaken against the USD at the Bureau De Change and Parallel ‘black’ market by 0.40% and 0.60% to close at N498.00/USD and N503.00/USD respectively.

Meanwhile, NGN/USD exchange rate closed flat at N380.69/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 Invisibles.

Elsewhere, the Naira/USD exchange rate rose (depreciated) for all of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months exchange rates rose by 0.08%, 0.27%, 0.23%, 0.45% and 0.51% to close at N413.43/USD, N416.17/USD, N418.11/USD, N424.09/USD and N435.74/USD respectively.

Meanwhile, the spot rate remained flat at N379.00/USD.

In the new week, we expect Naira to weaken against the greenback at most FX Windows amid declining external reserves which suggests a weakening capacity of the apex bank to continue to defend the local currency.