Naira stable scross FX markets amidst declining price of oil

NIGERIA’s local currency, Naira, was stable across foreign exchange market this week amidst monetary policy rate cut by the apex bank.

The Central Bank of Nigeria sold $100 million through the Secondary Market Intervention Sales (SMIS) Wholesale Window to boost liquidity levels and maintain stability in all segments of the market.

Likewise, in the Bureau De Change (BDC) segment, the CBN has offered over $200 million since the resumption of FX sales in the retail end of the market.

Meanwhile, oil prices fell 4.4% week on week to US$41.74 per barrel (bbl) from $43.68 bbl last week following the second wave of COVID-19 cases in Europe.

Locally, the external reserves decreased by 0.1% week on week to $35.8 billion. In the FX market, Afrinvest reported that the CBN spot rate traded flat all week at ₦379.00/US$1.00.

Meanwhile the rate at the parallel market depreciated ₦2.00 week on week to settle at ₦467.00.00/$1.00.

However, at the Investors & Exporters (I&E) Window, the National Autonomous Foreign Exchange (NAFEX) rate closed flat at ₦386.00/$1.00.Naira Stable Across FX Markets amidst Declining Price of Oil

In the Investors and Exporters Window (IEW), turnover fell 57.1% to $348.8 million from the $812.8 million recorded in the previous week, Afrinvest hinted.

 Similarly, at the FMDQ Securities Exchange FX Futures Contract Market, the total value of open contracts settled at $12.5 billion, down 0.3% ($31.5m) from the prior week.

The August 2021 instrument contract price of ₦420.81 had the most demand with an additional subscription of $28.0m putting the total value at $191.3 million.

Meanwhile, the December 2022 at contract price of ₦471.39, December 2023 at contract price of ₦512.97 and August 2025 at contract price of ₦590.10 instruments saw sell-offs worth $2.0m, $9.0m and $50.0m respectively.

“In the coming week, we expect naira to remain within a similar band across the different FX segments”, Afrinvest stated.

Source: Market Forces Africa