SAT 08 MAY, 2021-theGBJournal- Nigeria’s FX reserves position sustained its decline, as outflows from the reserves outstripped inflows. Thus, it dipped by USD173.24 million w/w to USD34.74 billion (7 May 2021).
The naira depreciated by 0.1% to NGN410.33/USD at the I&E window (IEW) but appreciated by 0.4% to NGN483.00/USD in the parallel market.
At the IEW, total turnover (as of 6 May 2021) increased by 8.3% WTD to USD321.45 million, with trades consummated within the NGN400.00 – 420.90/USD band.
In the Forwards market, the rate depreciated in the 1-month (-0.1% to NGN412.97/USD), but strengthened in the 3-month (+0.1% to NGN418.51/USD), 6-month (+0.1% to NGN427.48/USD) and 1-year (+0.2% to NGN445.47/USD) contracts.
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.