Naira Depreciates Further Against USD as Crude Oil Prices Crash Further

In line with our expectations, Naira depreciated further at the Investors and Exporters FX Window (I&E FXW) by 0.39% to close at N383.00/USD as crude oil prices, especially bonny light which fell further to a new low of USD21.41 per barrel on Thursday, April 2, 2020. Similarly, Naira depreciated further against USD at the Bureau De Change and the parallel (“black”) markets by 2.53% and 1.22% respectively to close at N405/USD and N415.00/USD respectively.

However, NGN/USD closed flat at the Interbank Foreign Exchange market, at N358.51/USD amid weekly injections of USD210 million by CBN into the foreign exchange market: USD100 million was allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisible.

Elsewhere, the Naira/USD exchange rate rose (i.e Naira depreciated) for most of the foreign exchange forward contracts: 2 months, 3 months, 6 months and 12 months rates appreciated by 0.24%, 0.53%, 1.48%, and 3.01% respectively to close at N389.64/USD, N393.11/USD, N405.79/USD, and N435.26/USD respectively. However, forward contract for 1 month depreciated by 0.08% to close at N386.32/USD; while spot rate remained flattish at N361.00/USD.

In the new week, we expect depreciation of the Naira against the USD across the market segments amid lower crude oil prices.

Cowry Asset Management Limited