Naira Steady at Investors Window as Foreign Reserves Rise

Naira Steady at Investors Window as Foreign Reserves Rise

The Nigerian local currency, Naira, was steady at the Investors and Exporters Window in the just concluded week as foreign reserves increase while oil prices gained 3%.

After the persistent drop, the external reserves position sustained an uptrend with about $49 million jumps in gross reserves during the week to $33.38 billion, data from Central Bank (CBN) monetary movement shows.

Also, foreign exchange market data showed that the local currency stayed flattish at N411.44 a dollar at investors and exporters window amidst CBN decision to cut FX supply to exchange bureaux.

The apex bank decision caused a market rout in the alternative foreign exchange segment as Naira faced a marked decline across space. At the parallel market, the local currency depreciated 2.5% to N517.00 a dollar.

Meanwhile, dollar volume traded at investors and exporters’ window increased by 52.2% from the beginning of the week to US$671.84 million while transactions were consummated within the N387.67 – 420.90.

In the forwards market, several analysts’ reports showed that the rate depreciated 0.2% across the 1-month to N413.70, 0.3% on 3-month contracts to N417.7, and 0.2% on 6-month contracts to N424.01. On a relatively longer tenor, trade was flat on the 1-year N436.43 contract.

Naira depreciated against the greenback at the Bureau De Change and Parallel markets by 2.00% and 2.58% to close at N510.00 and N517.00 to a dollar respectively as CBN stopped sales of US dollars to the BDCs.

In a market report, Cowry Asset said the opposite movement between rates investors’ window and alternative market widening the gap between the parallel market and the National autonomous foreign exchange (NAFEX) rate window.

The exchange rate closed flat at N380.69 a dollar at the Interbank Foreign Exchange market amid weekly injections of US$210 million by CBN into the forex market.

A total sum if US$100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), US$55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for Invisibles.

“ In the new week, as the stoppage of USD sales to the BDCs push more demand pressure to the parallel market, we expect Naira to further weaken against the greenback at the alternative FX Market segments”, Cowry Asset added.

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Naira Steady at Investors Window as Foreign Reserves Rise