SAT, 21 NOV, 2020-theGBJournal- Nigeria’s FX reserves decreased by USD95.82 million w/w to USD35.51 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 at NGN385.83/USD at the I&E window (YTD: -5.5%), while it further weakened by 2.1% to NGN480.00/USD in the parallel market (YTD: -24.6%).
In the Forwards market, the naira strengthened in the 1-month (+0.1% to NGN385.59/USD), 3-month (+0.2% to NGN386.08/USD) and 6-month (+0.2% to NGN386.11/USD) contracts, while it depreciated in the 1-year (-0.2% to NGN388.12/USD) contract.
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. However, we 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.