Business & Economy

Naira Loses Against USD at the Parallel Market as CBN Stops Sales of USD

In the just concluded week, Naira depreciated against the greenback at the Bureau De Change and Parallel markets by 2.00% and 2.58% to close at N510.00/USD and N517.00/USD respectively as CBN stopped sales of US dollars to the BDCs.

However, the Investors & Exporters market moved the opposite direction after a marginal 1bps strengthening to close at N411.44/USD; hence, widening the gap between the parallel market and the NAFEX window.

Meanwhile, NGN/USD exchange rate closed flat at N380.69/USD at the Interbank Foreign Exchange market amid weekly injections of USD210 million by CBN into the forex 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 Invisibles.

Afolabi Sotunde Illustration Naira

Elsewhere, the Naira/USD exchange rate depreciated for most of the foreign exchange forward contracts: 1 month, 2 months, 3 months, 6 months and 12 months exchange rates rose by 0.17%, 0.21%, 0.30%, 0.19% and 0.03% to close at N413.70/USD, N415.55/USD, N417.79/USD, N424.01/USD and N436.43/USD respectively.

However, the spot rate remained flat at N379.00/USD.

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In the new week, as the stoppage of USD sales to the BDCs push more demand pressure to the parallel market, we expect Naira to further weaken against the greenback at the alternative FX Market segments.

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