Naira Depreciates against US dollar as #EndSARS Protest Continues
The Nigeria’s local currency, naira plunged for second week as youths are unsatisfied with responses of federal government (FG) to #EndSARS protests across the country.
In the foreign exchange market, the value of Naira declined as more unit of local currency were demanded for a unit of United States dollar.
This is coming amidst rising hope for global prices of oil.
The Organisation for the petroleum Exporting Countries (OPEC) has increased its global oil demand estimate by 60,000 bpd.
OPEC raise is coming following economic recovery in China, thus estimate there will be an increase in demand to 90.29mbpd from 90.23mbpd in an earlier forecast.
Consequently, oil prices improved marginally by 4 basis points week on week to $43.03 per barrel in the week.
But from the domestic front, the Nigeria’s external reserves moderated 2 basis points to $35.7billion.
At the Bureau De Change as well as the parallel markets Naira value for exchange purpose declined by 1.11% and 1.09% respectively to close at ₦457/USD and ₦462/USD respectively.
Naira closed flat at ₦385.83/USD at the Investors and Exporters FX Window (I&E FXW).
Similarly, the local currency pair against dollar closed flat at ₦381 at the Interbank Foreign Exchange market amid weekly injections of USD210 million.
The weak foreign currency exchange rate was sustained despite the apex bank weekly intervention totaled $210 million.
The CBN intervened in the FX market with USD100 million allocated to Wholesale Secondary Market Intervention Sales (SMIS).
Total sum of USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.
Elsewhere, the Naira/USD exchange rate depreciated for most of the foreign exchange forward contracts.
Specifically, contracts tenor 1 month, 2 months, 3 months, 6 months and 12 months rates fell by 0.03%, 0.07%, 0.14%, 0.36% and 0.72% respectively to close at ₦386.50/USD, ₦387.29/USD, ₦388.19/USD, ₦391.30/USD and ₦400.25/USD respectively.
In the new week, analysts at Cowry Assets said they expect Naira/USD to remain stable at the Bureau De Change market amid sustained intervention by CBN.
However, analysts’ expectation is that there will be a marginal depreciation at the Investors and Exporters FX Window (I&E FXW) as 12 months forward contract depreciated to ₦400.25/USD signaling where the free market should trade.
The total value of open contracts of the naira at the FMDQ Securities Exchange FX Futures Contract Market increased 0.2% ($24.5m) to $11.2 billion.
Afrinvest however noted that the SEPT 2021 instrument with contract price of ₦420.09 received the highest subscription of $20.0m which took total value to $168.3m.
On the other hand, the AUG 2021 instrument at contract price of ₦417.25 recorded the least subscription worth $1.0m with a total value of $240.6m.
“We expect the exchange rates to remain range-bound at the official market and the I&E window”, Afrinvest said.
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Naira Depreciates against US dollar as #EndSARS Protest Continues
