FX: Naira Remains Stable Despite Sloppy Reserves, Coronavirus Outbreak

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FX: Naira Remains Stable Despite Sloppy Reserves, Coronavirus Outbreak

In the foreign exchange market, Naira remained strong at direct pair with foreign currencies last week.

The Central Bank of Nigeria  spot rate traded flat all week to close at ₦306.95/$1.00, appreciating 5kobo week on week from ₦307.00/$1.00 in the prior week.

Similarly, at the parallel market, rates traded flat to settle at ₦360.00/$1.00.

At the Investors’ & Exporters’ (I&E) Window, the Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) opened at ₦364.75/$1.00 and closed at ₦365.25/ $1.00 on Friday, depreciating ₦1.01 kobo from ₦364.26/$1.00.

The activity level in I&E Window rose 91.0% to $2.6 billion from $1.4 billion recorded in the previous week.

Meanwhile, after the conclusion of its Article IV consultation to Nigeria, the IMF highlighted the need for a uniform and flexible exchange rate regime.

External reserves further declined, down 1.1% ($393.9m) to $36.4 billion from $36.8 billion last week.

Analysts at Afrinvest said the prospect for accretion to reserves remains weak as oil price currently trading at $50.42 per barrel liter fell amid the downturn in global markets.

The CBN spot rate traded flat all week to close at ₦306.95/$1.00, appreciating 5kobo week on week from ₦307.00/$1.00 in the prior week.

Similarly, at the parallel market, rates traded flat to settle at ₦360.00/$1.00.

At the Investors’ & Exporters’ (I&E) Window, the NAFEX rate opened at ₦364.75/$1.00 and closed at ₦365.25/ $1.00 on Friday, depreciating ₦1.01kobo w/w from ₦364.26/$1.00.

The activity level in I&E Window rose 91.0% to $2.6 billion from $1.4 billion recorded in the previous week.

At the FMDQ Securities Exchange (SE) FX Futures Contract Market, the total value of open contracts of the Naira settled at $10.9 billion, down $1.3 billion (-6.4%) from $11.6 billion in the prior week due to the maturity of the FEB 2020 instrument.

The FEB 2021 instrument (contract price: ₦367.00) received the most buying interest in the week with additional subscription of $414.1m which took total value to $835.4m.

On the other hand, the SEP 2020 instrument (contract price: ₦365.79) was the least subscribed, with an additional subscription of $5.0m for a total value of $446.4m.

Analysts said they expect rates to continue to trade within a tight band across the different segments of the market this week.

FX: Naira Remains Stable Despite Sloppy Reserves, Coronavirus Outbreak