Naira Depreciates against the US dollar at the I&E FX window

A taxi cab passes a giant advertising screen showing US dollar, British pound and euro foreign currency exchange rates on a busy city road in Lagos, Nigeria, on Wednesday, July 26, 2017. Nigeria's economy, which in 2016 suffered its first full-year recession since 1987, will probably return to growth in 2017. Photographer: Tom Saater/Bloomberg

In line with our expectation, the local currency lost against the USD at the Investors & Exporters Forex Window (I&E FXW) by 0.19% to close at N364.70 as increased demand for the greenback
outweighed supply.

However, it appreciated by 0.29% to close at N359.81/USD at the Interbank
Foreign Exchange market amid weekly injections of USD210 million by CBN into the foreign exchange market via the Secondary Market Intervention Sales (SMIS) of which: USD100 million was allocated to Wholesale SMIS, USD55
million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles. The local currency remained unchanged at both the Bureau De Change (BDC) and the parallel (‘black’) market segments
to close N361/USD and N364/USD respectively.

Meanwhile, the Naira depreciated further for most dated foreign exchange forward contracts at the interbank over-the-counter (OTC) segment – spot, 1 month, 2 months and 3 months lost 0.02%, 0.19%, 0.15% and 0.08%, to close at N306.75/USD, N367.61/USD, N370.94/USD,
N374.65/USD respectively; However, 6 months and 1 year FX contracts gained 0.02% and 0.45%, to close at N385.10/USD and N412.01/USD respectively.

In the new week, we expect pressure on the Naira in most market segements, especially at the I&E FX Window,
as foreign portfolio investors continue to demand for the greenback.

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