SAT, MARCH 13 2021-theG&BJournal-Nigeria’s FX reserves position sustained its decline, as outflows from the reserves outstripped inflows. Thus, it dipped by USD176.57 million w/w to USD34.67 billion (10th March 2021).
The naira appreciated by 0.2% to NGN411.00/USD at the I&E window (IEW) and weakened by 1.0% to NGN485.00/USD in the parallel market.
At the IEW, total turnover (as of 11th March 2021) increased by 37.9% WTD to USD371.62 million, with trades consummated within the NGN390.00 – 415.00/USD band.
In the Forwards market, the rate appreciated across the 1-month (+0.4% to NGN412.27/USD), 3-month (+0.5% to NGN418.11/USD) and 6-month (+0.8% to NGN425.41/USD) contracts, and weakened on the 1-year (-0.5% to NGN442.13/USD) contract.
We expect improved liquidity in the IEW over the medium term, given the higher oil prices and an expected increase in crude oil production volume.
Accordingly, we expect the naira to remain relatively range-bound (NGN410.00/USD – NGN415.00/USD) at the IEW. Similarly, we believe the CBN will devalue the naira by 5.3% to NGN400.00/USD at the interbank market to narrow the gap with the IEW rate.