Naira Gains Across Forex Segments as CBN Intensifies Intervention

By Cowry Asset

Last week, the local currency appreciated week-on-week (w-o-w) against the Dollar at the Investors & Exporters Forex Window (I&E FXW) by 0.20 percent to close N360.85 amid 21.82 percent week to date increase in turnover to $1.34 billion as at Thursday, May 31, 2018.

Also, the local currency strengthened against the Dollar at the parallel (black) market and the Bureau De Change (BDCs) segments by 0.82 percent each to close N363/$ and N361/$ respectively on increased dollar supply to BDCs by 50 percent while the Naira/Dollar rate remained unchanged at the interbank foreign exchange market at N330/$ amid weekly injections by Central Bank of Nigeria (CBN) of $210 million into the foreign exchange market; of which $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

Meanwhile, most dated forward contracts at the interbank over-the-counter (OTC) segment appreciated; 1 month, 2 months and 3 months contracts gained 0.19 percent, 0.15 percent, 0.09 percent to close N364.26/$, N368.05/$ and N372.10/$ respectively.

However, spot rate and 6 months contracts lost 0.03 percent and 0.44 percent to close N306/$ and N386.48/$ respectively.

This week, we expect stability in the exchange rate at most market segments as CBN continues its intervention coupled with increased Dollar liquidity at the BDC segment.