Foreign Exchange: CBN’s intervention keeps Naira stable.
The Nigeria’s local currency, naira, remained stable, appreciates by 5 kobo this week at the foreign exchange market. The currency remains unwavering having being on the apex bank support.
For more than two years when the Central Bank of Nigeria (www.cbn.gov.ng) introduced multi tiered exchange regime, exchange rate movement has been largely steady, currency analysts said.
Afrinvest said it noted a surprising six basis points or US$23.7 million uptick in external reserves to US$38.3 billion January 15th after months of declines.
Analysts reckoned the apex bank sold US$253.38 million to the retail Secondary Market Intervention Sales (SMIS) and CNY16.76 million to the spot and short-tenored forwards segment of the inter-bank foreign market.
Currency trackers observed that naira traded within similar bands all week.
FX market chart shows that the CBN Spot rate opened the week at ₦306.95/US$1.00 but closed at ₦306.90/US$1.00, appreciating 5 kobo week on week.
At the parallel market, the exchange rate traded flat all week to close at ₦362.00/US$1.00.
Also, at the Investors’ & Exporters’ (I&E) FX Window, the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) closed at ₦361.84/US$1.00, appreciating 76 kobo in the week.
Meanwhile, activity level in the I&E Window advanced as total turnover grew 123.0% to US$2.6 billion from US$1.2 billion recorded in the previous week.
Currency traders’ notes show that at the FMDQ Securities Exchange (SE) FX Futures Contract Market, the total value of open contracts of the naira increased by US$195.2 million in the week to US$10.5 billion.
The DEC 2020 instrument with contract price of ₦367.18 saw the most buying interest with US$188.2 million additional subscription taking total value to US$678.48 million.
On the other hand, the SEPT 2020 instrument with contract price of N366.27 was the least subscribed, with marginal subscription of US$2.0m to gross US$371.5 million.
“In the coming week, we expect the CBN to maintain its foreign exchange stability drive by sustaining interventions”, Afrinvest predicts.
By Julius Alagbe