In an economic report released at the weekend, the Managing Director, Financial Derivatives Limited, Bismarck Rewane, said the Exporter/Importer Forex Window launched by the Central Bank of Nigeria (CBN) has recorded $1 billion deals in the last six weeks.
It would be recalled that CBN introduced a new foreign exchange window for investors and exporters targeted at increasing forex supply in the market and allowing the timely settlement of transactions.
According to Rewane, “So far, approximately $1billion has been traded at this window. The spread between the parallel and interbank markets narrowed to N76.15 (May 30) compared to N83.65 as at April 28”.
He said the naira at the parallel market appreciated by 2.63 per cent to close at N380/$ as at May 30, compared to N390/$ in April. At the interbank market, the naira gained marginally by 0.16 per cent to close at N305.90/$ from N306.85/$ in April. This was mainly driven by the new forex policies and regular intervention in the market by the CBN.
“We expect the naira to appreciate further in the coming month due to the CBN’s increased dollar sale to BDCs, the intervention for SMEs and favorable forex policy for investors, exporters and end-users. The threat to this is the uncertainty surrounding oil prices. Oil prices fell below $50pb in May before recovering to$52pb. Nonetheless, any further decline in oil prices could deplete the external reserves level, and hence hinder the CBN’s ability to intervene as frequently as possible,” he said.
He said Nigeria’s gross external reserves decreased by 1.19 per cent ($37million) to$30.49billion as at May 25 from $30.86billion recorded at the end ofApril.
“The decline in the external reserves level was due to funding for mature contracts and obligations. The gross external reserves, import and payment cover is down to 6.83 months lower compared to April’s level of 6.90 months,” he said.
On the ongoing appreciation in the stock market, Rewane said: “We posit that the recent positive developments in the forex market, the expectation of an economic rebound following improved oil revenues, successful external borrowings and a possible implementation of the government’s road map to economic recovery, have contributed to the extended rally on the Nigerian bourse. We expect this rally to persist till month-end, without excluding the possibility of profit taking.”
Rewane said the Nigerian equities market gained 6.81 per cent, hitting a seven-month high of 28,423.70 points in the first two weeks of May. The Year-to-date return on the index turned positive, to 2.38 per cent, while market capitalisation closed at N9.51trillion.
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