Dipo Olowookere
By Dipo Olowookere
There are strong indications that the Naira will perform badly against the United States Dollar at the domestic foreign exchange (forex) market this week.
This is because there are expectations that the local currency would be weakened in the week on the back of further decreasing external reserves of the country.
According to analysts at Cowry Asset, “In the new week, we expect depreciation of the Naira against the USD across the market segments amid decreasing external reserves.”
Business Post observed that the foreign reserves of Nigeria have been depleting lately and there are strong possibilities that the reserves could drop to the $42 billion region in the week.
As at Thursday, September 5, 2019, what was left in the reserves was $43.1 billion as the Central Bank of Nigeria (CBN) continued to defend the Naira to stay within N360/$ at the various market segments as the price of crude oil continue to move like a wave, somethings going below the $60 per barrel benchmark in the 2019 budget.
According to Cowry Asset, last week, the local currency traded flat at most forex market windows like the Bureau De Change (BDC) and the parallel (black) markets, where it closed at N358.00/$ and N360.00/$ respectively.
Similarly, the Naira was unchanged against the US Dollar to close at N358.04/$ at the interbank segment amid weekly injections of $210 million by CBN into the market via the Secondary Market Intervention Sales (SMIS).
At the intervention, the apex bank pumped $100 million into the Wholesale SMIS, $55 million into the Small and Medium Scale Enterprises and another $55 million for invisibles.
However, at the Investors and Exporters (I&E) window of the market, Naira appreciated against the Dollar by 0.23 percent to close at N362.08/$.
Meanwhile, the local currency appreciated against the Dollar for most of the foreign exchange forward contracts like the spot rate, one month, 2 months and 6 months by 0.17 percent, 0.03 percent, 0.25 percent and 0.17 percent to close at N306.90/$, N365.56/$, N369.04/$ and N384.46/$ respectively.
However, the Naira depreciated against the Dollar on the 3 months and 12 months on the contracts like by 0.01 percent and 0.69 percent to close at N307.60/$ and N411.91/$ respectively.
