Naira Declines at Black Market Despite CBN $205m Intervention

By Cowry Asset

Last week, the Naira depreciated at the Bureau de Change (BDC) and parallel market segments by 0.53 percent and 0.26 percent to close at N377/$ and N382/$ respectively.

However, the local currency appreciated week-on-week at the interbank market segment by 0.23 percent and 0.26 percent to close at 324.25/$.

This followed the CBN’s injection of $205 million into the foreign exchange market.

About $100 million was released for wholesale for spots and forwards, $50 million for invisibles and $55 million for SMEs.

Meanwhile, the weekly movements in most dated forward contracts at the interbank OTC segment suggested future appreciation of the Naira viz-a-viz the US greenback despite decrease in the foreign exchange reserves – external reserves decreased week-on-week by 0.66 percent to $30.519 billion as at Wednesday, 24 May 2017.

The 1 month, 3 months, 6 months and 12 months forward contracts remained stable w-o-w at N319.69/$, N327.76/$, N336.24/$ and N353.70/$ respectively.

Furthermore, the spot rate appreciated by 0.03 percent to N305.35/$ amid 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.