Naira Tumbles at Official Window, Forward Rate Holds Strong
The Nigerian local currency, naira, dropped off 0.18 per cent of its opening value in the just concluded week, though held strong for forward contracts as headline inflation rate moderate while the nation’s gross domestic product grew 3.49% in 2021.
In line with currency traders’ expectations, the foreign exchange rate depreciated by 0.18 per cent to close at N416.75/$ at the investors and exporters FX Window as external reserves dwindled, tracking below the $40,000 benchmark.
In the parallel market, the exchange rate was pressured amidst rising demand and low FX supply, according to currencies traders.
Data obtained from channel checks showed that Naira traded at N576 against the greenback in the parallel market in the just conclude, shed 0.17 per cent week on week.
However, at the Interbank Foreign Exchange market, the exchange rate closed flat at N430.00 per dollar amid CBN’s weekly injections of $210 million. Read: Treasury Yield Tumbles as Naira Steady Against Dollar
Of the sum, $100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for Invisibles.
Meanwhile, the foreign exchange rate fell for all of the foreign exchange forward contracts, according to traders note from Cowry Asset Limited.
Specifically, 1 month, 2 months, 3 months, 6 months and 12 months contracts decreased by 0.06 per cent, 0.16 per cent, 0.03 per cent, 0.13 per cent and 0.12 per cent to close at N418.34/$, N421.34/$, N424.15/$, N433.45/$ and N448.06/$ respectively.
In the new week, Cowry Asset analysts expect Naira to depreciate against the dollar amid dwindling foreign exchange reserves even as the GDP report showed that the country’s oil & gas sector remained in recession
At the Investors and Exporters FX window, the volume of dollars traders declined by 24.5 per cent in the week to $429.70 million, with trades consummated within the N410.00 – 453.11 per dollar band.
