Naira Falls Against Greenback at I&E FXW on Weak Supply

By Cowry Asset

In the just concluded week, the Nigerian Naira further depreciated week-on-week (w-o-w) against the U.S. dollar at the Investors & Exporters Forex Window (I&E FXW) by 0.35 percent to close N362.58 amid stronger demand for the greenback vis a vis weaker supply.

Transactions worth $684.76 billion were lower as at Thursday, July 5, 2018 compared with $728.49 billion worth of transactions done as at Thursday, June 28, 2018.

However, the local currency appreciated against the US Dollar at the Bureau De Change segments and the parallel (black) market by 0.28 percent each to close at N358/$ and N361/$ on sustained special intervention by Central Bank of Nigeria (CBN).

The Naira/Dollar rate closed flat at the interbank foreign exchange market at N330/$ amid weekly injections by the apex bank of $210 million into the foreign exchange market via the Secondary Market Intervention Sales (SMIS); of which $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

Meanwhile, most dated forward contracts at the interbank over-the-counter (OTC) segment further depreciated; 1 month, 2 months, 3 months and 6 months contracts lost 0.30 percent, 0.27 percent, 0.29 percent and 0.60 percent to close N366.05/$, N369.74/$, N373.59/$ and N387.81/$ respectively; however, spot rate appreciated by 0.02 percent to close N305.70/$.

Next week, we expect stability in the exchange rate at most market segments as CBN continues its weekly SMIS intervention coupled with the special intervention at the BDC segment to boost liquidity.