By Dipo Olowookere
This week, the local currency strengthened against the Dollar at the parallel (black) market by 0.28 percent to N362/$ while the Naira/Dollar rate remained unchanged at the interbank foreign exchange market and the Bureau De Change segments at N330/$ and N360/$ respectively.
However, Naira weakened at the I&E forex window by 0.09 percent to close at N360.75/$ from N360.41/$ despite weekly injections by Central Bank of Nigeria (CBN) of $210 million into the foreign exchange market.
According to analysts at Cowry Asset, the apex bank allocated $100 million to the Wholesale (SMIS) window, gave $55 million to the Small and Medium Scale Enterprises, while $55 million was also sold to cater for invisibles.
During the week too, Nigeria and China sealed an annual $2.5 billion (or RMB16 billion) currency swap deal to facilitate trade between the two countries.
This would be done by providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby sidestepping a third currency, the US dollar.
This arrangement is expected to ease pressure on the limited Dollar supply at the Investors & Exporters Forex Window (I&E FXW) and hence, enhance stability of the NGN/USD exchange rate.
Meanwhile, most dated forward contracts at the interbank over-the-counter (OTC) segment appreciated amid rising external reserves – 2 months, 3 months, 6 months and 12 months contracts strengthened by 0.06 percent, 0.16 percent, 0.69 percent and 0.85 percent to close N366.70/$, N370.10/$, N381.10/$ and N401.90/$ respectively.
Next week, Cowry Asset expects stability in exchange rate as CBN continues with the weekly intervention.
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