THUR, 24 DEC, 2020-theGBJournal- Nigeria’s FX reserves recorded its first weekly accretion in eight weeks, as the gross reserves position increased by USD67.89 million w/w to USD34.91 billion.
Across the windows, the naira appreciated against the US dollar by 0.5% to NGN392.00 In the I&E window (YTD: -7.0%), and by 2.6% to NGN465.00/USD in the parallel market (YTD: -22.2%). In the Forwards market, the naira was flat in the 1-month (NGN397.76/USD) contract, but strengthened at the 3-month (+0.3% to NGN403.86/USD), 6-month (+0.4% to NGN413.71/USD) and 1-year (+0.6% to NGN431.64/USD) contracts.
Given the expected pressure on the external reserves amid weak portfolio inflows, the naira is forecast to depreciate closer to its fair value implied by long-run REER (NGN453.67) in the medium term.
‘’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,’’ says CORDROS Research