Naira Sinks to N1672 despite $102m FX Interventions
The naira suffered losses against the US dollar despite the fact that the Central Bank of Nigeria (CBN) intervened twice this week. According to spot data from the FMDQ platform, the naira depreciated by 1.69%, closing at ₦1,672.69 per dollar in the official market on Friday.
The naira depreciated by 1.2% this week at the Nigerian Autonomous Foreign Exchange Market (NAFEM). Within the week, foreign portfolio investors brought forward FX inflows in anticipation of an OMO auction, Cordros Capital Limited revealed.
The CBN also intervened in the forex market twice, selling about USD102.00 million to authorized dealers. At the first FX auction to banks, the Apex Bank sold $48 million to authorised dealers. The CBN later sold $54 million to banks between the rates of N1,655 and N1,660,” TrustBanc Financial Group revealed in a note.
Analysts noted that for the first time in twelve weeks, the country’s FX reserves declined by US$34.92 million to USD40.24 billion. Total turnover at the Nigerian autonomous foreign exchange market increased by 67.1% to USD 1.97 billion on Thursday, according to Cordros Capital Limited.
The investment firm revealed that trades were consummated within the N1,557.00–1,706.00 per greenback band. FX contracts appreciated in the forward market. The one-month FX forward contract appreciated by +2.2% to N1,703.48 per US dollar
The three-month FX forward contract rose by +2.3% to N1,776.14 per US dollar. Also, the six-month FX forward contract appreciated by +2.1% to N1,888.22, while the one-year contract gained +2.5% to N2,104.86 per US dollar. The naira has lost 84% from the beginning of the year to date, according to FX trading records tracked by MarketForces Africa.
In anticipation of the upcoming Eurobond issuance totaling USD 1.70 billion, analysts said they expect stronger FX reserves in the short term, supporting CBN’s ability to keep the naira stable in the short to medium term.
However, in line with CBN’s FX reserve management and price discovery goal, analysts at Cordros Capital said they do not expect a significant appreciation in the naira as the CBN maintains tepid intervention to keep the naira stable. Naira Plunges on Suboptimal FX Intervention
