By Cowry Asset
Last week, the local currency appreciated week-on-week in most foreign exchange market segments.
The Naira firmed against the US Dollar at the Interbank and Parallel market segments by 0.37% and 2.39% to N323.81/USD and N367/USD respectively.
This followed CBN’s injection of $190 million into the foreign exchange market of which $100 million was allocated to Wholesale (SMIS), $50 million was allocated to Small and Medium Scale Enterprises while $40 million was sold for invisibles. The local currency also appreciated at Investors & Exporters Forex Window (I&E FX) by 1.82% to N373.28/$ but weakened at the Bureau De Change segment by 0.56% to N362/$.
Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment suggested future stability of the Naira/$ exchange rate amid rise foreign exchange reserves – external reserves increased week-to-date by 0.14% to $30.29 billion as at Wednesday, 07 June 2017.
The 1 month, 3 months, 6 months and 12 months forward contracts remained stable w-o-w at N320.00/$, N328.07/$, N336.56/$ and N354.04/$ respectively.
Furthermore, the spot rate depreciated by 0.05% to N305.60/$ despite the $7.5 million in intervention sales by CBN to banks.
In the current week, we expect further stability in the foreign exchange market with possible appreciation against the Dollar subject to CBN’s level of intervention.
Adedapo Adesanya