By Dipo Olowookere
It has been predicted that the value of the Naira to the United States Dollar will depreciate this week as a result of further decline in the foreign reserves of the country.
Business Post reports that as at Thursday, August 29, 2019, the amount left the external reserves of Nigeria was $43.673 billion, lower than the $43.008 billion it was opened with on Monday, August 26, 2019, before depreciating to $43843 billion on that day.
Giving its insight on what to expect in the week, Cowry Asset, a Lagos-based investment company, stated that, “We expect depreciation of the Naira against the USD across the market segments amid decreasing external reserves.”
Last week, the NGN/USD rate was unchanged at most foreign exchange market segments.
Specifically, the NGN/USD exchange rate remained unchanged at the Bureau De Change and the parallel (black) markets to close at N358.00/$ and N360.00/$ respectively.
However, the Naira gained 0.02 percent against the US dollar to close at N358.04/$ at the interbank Foreign Exchange (forex) market despite the weekly injections of $210 million by the Central Bank of Nigeria (CBN) into the forex market via the Secondary Market Intervention Sales (SMIS).
At this intervention, the apex bank allocated the sum of $100 million to Wholesale SMIS, $55 million was allotted to Small and Medium Scale Enterprises and another $55 million was sold for invisibles.
During the week, the local currency further appreciated at the Investors and Exporters FX Window (I&E FXW) by 0.06 percent to close at N362.93/$.
Meanwhile, Naira appreciated against the Dollar for most of the foreign exchange forward contracts – 1 month, 2 months 3 months and 6 months by 0.17 percent, 0.32 percent, 0.51 percent and 0.62 percent to close at N366.46/$, N369.66/$, N372.56/$,
N385.81/$ respectively.
However, the local currency depreciated against the Dollar at the spot rate and 12 months rate by 0.02 percent and 0.18 percent to close at N307.00/$ and N409.09/$ respectively.
Adedapo Adesanya