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FX WATCH: FX reserves records another week of accretion, grows by US$163.58 million w/w to US$35.20 billion, naira depreciates by 0.5%

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SAT 17 APRIL, 2021-theGBJournal-Nigeria’s FX reserves recorded another accretion this week, as it grew by USD163.58 million w/w to USD35.20 billion (14th April 2021).

The naira depreciated by 0.5% to NGN411.00/USD at the I&E window (IEW) but appreciated by 0.6% to NGN482.00/USD in the parallel market.

At the IEW, total turnover (as of 16th April 2021) increased by 17.6% WTD to USD236.97 million, with trades consummated within the NGN392.00 – 437.62/USD band. In the Forwards market, the rate depreciated across the 1-month (-0.2% to NGN412.82/USD), 3-month (-1.0% to NGN419.55/USD), 6-month (-1.9% to NGN428.64/USD) and 1-year (-3.2% to NGN448.27/USD) contracts.

We expect improved liquidity in the IEW over the medium term, given 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.

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