Naira Firms Against Dollar Across Market Segments

By Cowry Asset

In the just concluded week, the local currency appreciated week-on-week in all foreign exchange market segments amid sustained intervention by CBN coupled with recent accretion to the foreign exchange reserves with proceeds of the recent $3 billion Federal Government Eurobond issue which increased the country’s public sector foreign assets to over $38 billion.

Specifically, the Naira strengthened against the Dollar at the interbank market (NIFEX), the I&E FX window, the Bureau De Change (BDC) and Parallel market segments by at N361/$ and N364/$ respectively.

These were amid injections by the CBN worth $210 million into the foreign exchange market of which $100 million was allocated to Wholesale (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.

Meanwhile, dated forward contracts at the interbank OTC segment appreciated amid sustained increase in the foreign exchange reserves – the 1 month, 2 months, 3 months and 6 months contracts appreciated w-o-w by 0.24%, 0.34%, 0.42% and 1.25% to close at N365.05/$, N370.16/$, N375.62/$ and N392.33/$ respectively.

This week, we retain our favourable outlook for the exchange rate amid sustained stability in global crude oil prices which should result in further build-up in foreign reserves as well as CBN‟s continued intervention in the various segments of the interbank foreign exchange market.