Dipo Olowookere
By Cowry Asset
In the just concluded week, the local currency depreciated w-o-w in most foreign exchange market segments.
The Naira lost ground against the US Dollar at the Interbank, Bureau De Change segment and Parallel market segments by 0.37%, 0.55% and 0.82% to N325/USD, N364/USD and N370/USD respectively.
This was despite injections by the CBN worth $413.5 million into the foreign exchange market of which $100 million was allocated to Wholesale (SMIS), $28 million was allocated to Small and Medium Scale Enterprises, $260 million was released for sales in the retail window that took place last week, and $25.5 million was sold for invisibles.
However, the local currency appreciated at Investors & Exporters Forex Window (I&E FXW) by 2.14% to N365.29/USD. Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment suggested future stability of the Naira/USD exchange rate amid a slight decrease in the foreign exchange reserves – external reserves decreased week-to-date by 0.24% to USD30.21 billion as at Thursday, June 15, 2017.
The 1 month, 3 months, 6 months and 12 months forward contracts remained stable w-o-w at N320.00/USD, N328.07/USD, N336.56/USD and N354.04/USD respectively. However, the spot rate depreciated by 0.05% to N305.75/USD despite the USD7.5 million in intervention sales by CBN to banks.
In the current week, we expect further convergence in the foreign exchange market with possible appreciation against the USD subject to CBN’s level of intervention.
Source: Cowry Asset
