Having firmed to N640 to the dollar at the parallel market, the value of the naira, saw a depreciation last week, this is as the external reserves of the country depleted by $211 92 million within the first 11 days of August.
The reserves which had risen to $39.444 billion as at July 18, 2022 had been on the decline since dropping to N39.093 billion on the first day of August before declining further to N38.881 billion as at August 11, 2022.
Across the markets, the value of the naira had also seen a depreciation as it weakened by 0.3 per cent at the Investors’ and Exporters’ window where it sold at N429.63 to the dollar. At the parallel market, the value of the naira depreciated by 2.2 per cent to N675 to the dollar further widening the gap between the two markets by N246.
Scarcity of the greenback continued to loom at both ends of the market with the I&E window seeing a 38 per cent decline in weekly turnover which stood at $325.6 million as at Thursday last week, with trades consummated within the N415 and N444 to the dollar band.
In the Forwards market, the naira depreciated at the 1-month contracts by -0.1 per cent to N429.51 and 1-year contracts by -0.6 per cent to N482.24 to the dollar, but appreciated at the 3-month contracts by 0.1 per cent to N438.51 and 6-month contracts 2.0 per cent to N452.24 to the dollar.
Meanwhile analysts say they expect liquidity to remain tight this week with the bond issuance expected. The Debt Management Office (DMO) is expected to hold the August 2022 FGN Bond auction today, Monday August 15, 2022.
According to analysts at Cordros Research, the N100 billion inflow expected form OMO maturities may not be sufficen to offset the outflows through the bond issuance as well as CBN’s OMO and forex auctions.
At the auction, the DMO will offer instruments worth N225.00 billion through re-openings of the 13.53% FGN MAR 2025, 12.5000% FGN APR 2032 and 13.0000% FGN JAN 2042 bonds. “Notwithstanding, we maintain our stance that yields will continue to rise over the short-term given that the FGN’s borrowing plan for 2022FY and expected fiscal deficit point towards an elevated supply.”
