BY BAMIDELE FAMOOFO
In the just concluded week at the open market, the local currency worsened in value against the United States dollar as it depreciated by N11 or 1.46 percent week on week to close at N766/USD from N755/USD in the previous week. On the other hand, at the investors’ and exporters’ FX window, the Naira appreciated by a marginal 0.05 percent week on week to close at N461.25/USD from N461.50/USD despite the growing FX pressure on the naira and the newly redesigned currency circulation battle.
A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate moved further against the Naira by 3.82 percent to close at N462/USD from N445/USD from the previous week. Cowry Asset Management Limited noted in its analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets that it was all green for the dollar index across all forward contracts except for the 1- Month tenor that appreciated by 1.39 percent to close at N486.88/USD.
A LOOK AT ACTIVITIES AT THE INTERBANK FOREIGN EXCHANGE FORWARD CONTRACTS MARKET, THE SPOT EXCHANGE RATE MOVED FURTHER AGAINST THE NAIRA BY 3.82 PERCENT TO CLOSE AT N462/USD FROM N445/USD FROM THE PREVIOUS WEEK”
On the contrary, the 2-Month, 3-Month, 6-Month and 12- Month tenor contracts depreciated against the greenback by 0.9 percent, 1.50 percent, 5.82 percent and 16.82 percent week on week to close at contract offer prices of N485.88/USD, N493.97/USD, N533.80/USD and N618.70/USD respectively.
In the oil market, during the review week, oil price oscillation signaled negative close on Friday and was largely driven by the concerns that the Federal Reserve was not done with aggressive rate hikes which could counter the positive demand forecast from OPEC and IEA. On the home front, analysts saw the Bonny light crude price reacted to factors playing in the oil market as it declined by 2.33 percent or (USD2.09) week on week to close at USD87.46 per barrel from USD89.55 per barrel last week.
In the opinion of Cowry Asset, the Naira demand pressure is expected to stay unabating following the limited supply of the local currency ahead of the general elections and the extension of the deadline for the old notes deposition.
Meanwhile, reactions have continued to trail the Naira redesign programme and rollouts into the economy by the Central Bank of Nigeria as demand and supply pressures in the currency market persisted for another week. During the just concluded week, Nigeria’s President Muhammadu Buhari ordered the CBN to recirculate the old N200 into the banking system alongside the newly designed banknotes until April 10, 2023 when it will cease to be a legal tender.
This move is aimed to curb activities of money-laundering, votebuying, and ransom-taking by Kidnappers. In the short to medium and long terms, according to Buhari, the policy is expected to strengthen macroeconomic parameters; reduce broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices; lower inflation as a result of the accompanying decline in money supply that will slow the pace of inflation; collapse of illegal economic activities which would help to stem corruption and acquisition of money through illegal ways; exchange rate stability; availability of easy loans and lowering of interest rates; and greater visibility and transparency of financial actions translating to efficient enforcement of our anti-money laundering legislations.
President Buhari, in a state broadcast, Thursday last week, acknowledged that the naira redesign policy recorded initial setbacks, causing untold hardship for the people. Meanwhile, he said the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative. “I have been reliably informed that since the commencement of this programme, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved. This represents about 80% of such funds,” he said.
