Naira Weakens at Forex Market as Foreign Reserves Drop to $43b

By Dipo Olowookere

The local currency put up a weak performance at the foreign exchange (forex) market last week amid declining external reserves that fell further by 1.30 percent to $43.35 billion as at Thursday, October 11, 2018.

The loss recorded by the Naira was almost across all segments of the forex market.

Specifically, the Naira/Dollar rate depreciated at the Investors & Exporters (I&E) forex segment by 0.08 percent to close at N364.12/$.

Also, the local currency lost 0.33 percent week-on-week (w-o-w) at the interbank foreign exchange market to quote at N362.52/$ despite the weekly injections of $210 million by the Central Bank of Nigeria (CBN) into the market via the Secondary Market Intervention Sales (SMIS).

A breakdown of the intervention showed that $100 million was allocated to Wholesale SMIS, $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

The exchange rate also depreciated at both the Bureau De Change (BDC) segment and the parallel market by 0.28 percent each to close at N359/$ and N362/$ respectively despite CBN’s sustained weekly intervention.

Meanwhile, according to Cowry Asset, most dated foreign exchange rate forward contracts at the interbank over-the-counter (OTC) segment depreciated.

Specifically, the 1 month, 2 months and 3 months contracts lost 0.08 percent, 0.06 percent and 0.02 percent to close N367.71/$, N371.26/$ and N374.73/$ respectively.

However, the 6-month contracts gained by 0.02 percent to close for the week at N386.21/$.