SAT 23 JAN, 2021-theGBJournal- Nigeria’s FX reserves sustained its ascent for the fifth consecutive week, as it grew to its highest level since 10th June 2020. Specifically, the reserves grew by USD133.79 million w/w to USD36.48 billion (20th January 2021).
Across the FX windows, the naira appreciated against the US dollar by 0.1% w/w, to NGN394.17/USD at the I&E window, and depreciated by 0.4% to NGN477.00/USD in the parallel market. At the I&E window, total turnover decreased by 29.3% WTD to USD262.37 million, with trades consummated within the NGN388.00 – 415.76/USD band.
In the Forwards market, the rate weakened in the 1-month (-0.1% to NGN398.27/USD) contract, strengthened in the 6-month (+0.1% to NGN416.23/USD) contract and was flat in the 3-month (NGN405.61/USD) and 1-year (NGN435.28/USD) contracts.
Meanwhile, Cordros Research analysts say they expect the naira to depreciate closer to its fair value implied by long-run REER (NGN453.67) in the medium term, given the expected pressure on the external reserves amid weak portfolio inflows.
‘’Our baseline expectation is that the CBN will depreciate the naira by 5.3% to NGN400/USD in the interbank market and 5.1% to NGN415/USD at the IEW.’’