The Naira gained across investors and exporters (I&E) window and the parallel market with predictions by various analysts of the trend sustaining as foreign reserves records gains as well.
Last week, the Naira appreciated by 0.1 per cent to N461.50/USD at the I&E window as the external reserve rose marginally rising by $2.61 million week-on-week (w/w) to $37.21 billion as of 18 January 2023.
Commenting, analysts at Cordos Securities stated: “Nigeria’s FX reserve recorded another accretion, rising by $2.61 million w/w to $37.21 billion as of 18 January 2023. In the same vein, the naira appreciated by 0.1 per cent to N461.50/$ at the I&E window with total turnover at the window as of 19 January increasing by 10.6 per cent week-to-date to $527.52 million, as trades were consummated within the N440.00 – N478.80/$ band.”
They further added that they believe the FX liquidity issues will remain over the short-to-medium term as they do not see any positive signal that denotes an improvement in FX supply relative to the pre-pandemic levels.
They said, “Moreover, considering the tepid accretion to the reserves given low crude oil production and elevated premium motor spirit (PMS) under-recovery costs, FPIs which have historically supported supply levels in the I&W will be needed to sustain FX liquidity levels in the medium to long-term. Hence, we think further adjustments in the NGN/$ peg closer to its fair value and flexibility in the exchange rate would significantly attract foreign inflows back to the market.”
Also, activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchained from the previous week as it closed the week at N445/$ from last week.
In their weekly report, analysts at Cowry Asset Management Limited stated: “Our analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets, the trend across most tenors closed negative. Thus, the six-month Forward Contract was the lone gainer against the dollar as it rose 1.83 per cent week on week to N500.42 per dollar. Meanwhile the 1-month, 2-month, 3 month and 12-month contracts all skid by 0.63 per cent, 0.87 per cent, 0.88 per cent and 1.38 per cent w/w to close at contract offer prices of N479.62/$, N485.03/$, N486.55/$ and N531.47/$ respectively.”
SOURCE: THISDAY
