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FX reserves decrease as CBN maintains support for currency, naira weakens by 1.3% to N470/$ in the parallel market

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SAT, 14 NOV, 2020-theGBJournal-Nigeria’s FX reserves decreased by USD11.55 million w/w to USD35.63 billion, as the CBN maintained its support for the currency via its weekly interventions across the various FX windows.

Across the windows, the naira closed flat against the US dollar at NGN386.00 at the I&E window (YTD: -5.6%), but weakened by 1.3% to NGN470.00/USD in the parallel market (YTD: -23.0%).

In the Forwards market, the naira strengthened in the 6-month (+0.4% to NGN386.87/USD) and 1-year (+1.4% to NGN387.33/USD) contract, but was flat in the 1-month (NGN386.11/USD) and 3-month (NGN386.67/USD) contracts.

Going forward, we expect CBN’s FX management strategies to continue supporting the naira at its current level at the official and I&E windows.

CORDROS Research analysts believe the parallel market rate will remain volatile and continue to trade above the CBN’s Relative Purchasing Power Parity (RPPP) of NGN433.64/USD and ”our REER fair value estimate of NGN453.67/USD at the current level of intervention in the FX market.”

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