Demand and supply pressures in the currency market persisted for another week but the value of the naira strengthened last week across the board.
Naira regained strength in the face of the lingering currency crunch in the economy following the outcome of the presidential and national assembly elections and the recent ruling of the Supreme Court on Friday.
Business Metrics reported earlier that in its ruling, the apex court called for the continued usage of the old N200, N500 and N1,000 banknotes until December 31. This development particularly raised optimism on the naira availability and usage thus offsetting high demand of the greenback.
In the week under review at the open market, the local currency edged the United States dollar as it appreciated by N4.00 or 0.53% week on week to close at N758/USD from N762/USD in the previous week even dollar demand spook exchange rates across various FX segments.
Also, at the investors’ and exporters’ FX window, the Naira depreciated by marginal 0.13% week on week to close at N461.75/USD from N461.17/USD despite the growing FX pressure on the naira.
A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchanged closed at N462/USD.
Also, after a cursory analysis of the Naira/USD exchange rate in the weekly Naira FX Forward Contracts Markets, it was all green for the Nigerian naira index across all forward contracts with appreciations reported for the 1-Month, 2-Month, 3-Month, 6-Month and 12-Month tenor contracts against the greenback by +3.76%, +1.54%, +1.14%, +2.59% and +5.00% week on week to close at contract offer prices of N467.20/USD, N476.27/USD, N486.10/USD, N512.13/USD and N543.35/USD respectively.
In the oil market last week, Oil price oscillation signaled positive close on Friday and was largely boosted by disruptions from the Ukraine-Russia war on crude tanker flows, sprouting higher profits for midsize crude tankers and the U.S crude exports on the bank of ban on seaborn imports from Russia.
On the home front, the Bonny light crude price reacted positively to factors playing in the oil market as it surged in a propelling manner by 4.4% or (USD3.70) week on week to close at USD87.79 per barrel to USD84.09 per barrel last week.
“In our opinion, the Naira demand pressure is expected to stay unabating following the limited supply of the local currency market and the recent ruling from the Supreme court on Friday which renders the old banknotes a legal tender until the December 31,2023.
“However, it is very unlikely for the apex bank to comment on the court judgement as it has resolved to phase out the old banknotes from system in the bid to monitor currency in circulation and money supply,” Analysts at Cowry Assets said.
