Naira appreciates at I&E window as analysts hope for range-bound rates this week

ANALYSTS AT AFRINVEST RE SEARCH have expressed optimism for a range-bound exchange rate in the coming week at the foreign exchange market, amidst the currency’s appreciation at Importers’ & Exporters’ window of Nigeria’s opaque foreign exchange markets.

Specifically, at the Investors’ & Exporters’ (I&E) Window, the NAFEX rate appreciated 3.25 to settle at

386.00 to one United States dollar ($1.00).

Influencing fundamentals such as Nigeria’s external reserves maintained a downtrend last week, declining 0.6 percent week on week to $35.7 billion by the end of the first full week of August, as the Central Bank of Nigeria (CBN) continued its weekly foreign currency intervention sales, while on the global front, oil prices rose, up 2.2 per cent week on week to $44.5/bbl. even as the OPEC+ eased daily oil production cut to 7.7 million barrels from 9.7 million barrels, the analysts wrote in a note seen by Business A.M.

The CBN spot rate at the official window closed flat at 381 to a dollar. At the parallel market, the naira appreciated 1.00 to close at 474.00 against the dollar. Similarly, at the Investors’ & Exporters’ (I&E) window, the NAFEX rate appreciated

3.25 to settle at 386.00 to the United States dollar.

Meanwhile, the activity level in the I&E window surged 45.0 per cent to $177.9 million from the $121.8 million recorded in the previous week, although there were only three trading sessions for that particular week.

Also, the total value of open contracts of the naira at the FMDQ Securities

Exchange (SE) FX Futures Contract Market increased 1.9 per cent week on week from $30.3 million to $12.9 billion. The SEPT 2020 instrument (contract price:

394.67) received the highest subscription of $17.1 million which took the total value to $1.2 billion.

On the other hand, the JAN 2021 instrument (contract price: 405.52) recorded the least subscription of $1.7 million with a total value of $1.2 billion.

Afrinvest analysts at the market have expressed their optimism for the market this week. “We expect exchange rates to remain rangebound across the different segments of the market in the coming week,” they said in their analysts’ note obtained by Business A.M.