Market News

• Naira appreciates

The Nigeria’s FX reserves recorded accretion, as the gross reserves level increased by $337.89 million week/week to $36.9 billion as at  September 12.

This represents 1.5 per cent or $528.6 million inflows, week-on-week to $36.9 billion

Data from the Central Bank of Nigeria (CBN) portal, showed that the reserves stood  at $36.244 billion on September 2 and $36.274 billion on September 3 and $36.7 billion on September 10, indicating steady surge.

Report from Cordros Securities, says the reserves boost possibly reflects inflows from the proceeds $900 million proceeds from the domestic FGN US Dollar bond recently concluded.

Afrinvest weekly report said  Brent crude oil price rose three per cent week-on-week  w/w to $73.20/bbl. The domestic bond market witnessed robust activity this week, highlighted by the successful launch of the government’s inaugural dollar-denominated bond. The five-year bond, issued by the Debt Management Office (DMO) to raise $500 million was met with strong demand, oversubscribed by $400 million.

Analysts said the dollar bond is expected to provide a much-needed boost to foreign exchange inflows and help address short-term supply-demand imbalances in the market.

Earlier last week, Brent crude oil price dipped to a 52-week low of $68.52/bbl. owing to cooling global demand, particularly due to economic struggles in China, and hurricane Francine which caused significant disruptions in the US Gulf of Mexico resulting in evacuation of production platforms.

Meanwhile, OPEC+ postponed plans to increase production provided support to prices.

The report said that following the Central Bank of Nigeria’s intervention of $121.00 million last week, the naira appreciated by three per cent week/week (w/w) to N1,546.41 to dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

However,  undermining the CBN’s intervention of  $121.00 million during the week, the total turnover at the NAFEM dropped  by 15.7 per cent week-to-date to $980.92 million, with trades consummated within the N1,499.00/$ to N1,668.00/$ band.

In the forwards market, the naira rate decreased across the 1-month (-0.5 per cent to N1,668.65/$) and 3-month (-0.2 per cent to N1,738.23/$) contracts, but increased across the 6-month (+0.2 per cent to N1,838.87/$) and 1-year (+1.1% to N2,052.05/$) contracts

 “The naira is likely to remain under pressure despite recent efforts by the CBN to stabilise the currency. We expect market demand may continue to outweigh supply given the CBN’s mild intervention and weak Foreign Portfolio Investment (FPI) inflows,” the report said.