The CBN spot rate closed the week at ₦307/$1.00, depreciating 5 kobo w/w from ₦306.95/$1.00 in the prior week. But at the parallel market, naira traded flat at ₦360.0/$1.00.
At the Investors’ & Exporters’ (I&E) Window, the NAFEX rate depreciated 100 kobo to settle at ₦366.25/ $. Activity level in I&E Window rose 14.4 per cent to $3.0 billion from $2.6 billion recorded in the previous week
Organisation of Petroleum Exporting Countries (OPEC)+ met last week with plans to cut oil production by an additional 1.5mb/d to support prices due to the sharp fall in oil demand prompted by COVID-19. However, OPEC failed to reach a deal as Russia opposed further cuts at the end of the meeting on Friday. The immediate reaction to the outcome of the meeting was a moderation in Brent crude price to a 3-year low of $45.6/bbl. On the domestic front, the external reserves fell 0.2 per cent w/w to $36.2 billion (5/3/2020).
“With reports of unrestrained production starting on April 1, we expect Nigeria to be hit hard by the fall in oil prices”, said analysts at Afrinvest.
The total value of open contracts of the naira at the FMDQ Securities Exchange (SE) FX Futures Contract Market advanced 2.2 per cent ($235.2 million) to $11.1 billion. The FEB 2021 instrument (contract price: N367.00) received the highest subscription of $133.4 millin, taking total value to $968.8 million as foreign investors maintained preference for the 1-year OMO instrument. On the other hand, the MAR 2020 instrument (contract price: N364.33) recorded sell-offs which reduced subscription by $4.8 million to $1.2 billion. It is believed that oil prices will remain pressured by waning demand as the virus continue to spread. We expect exchange rates to remain range-bound across different segments of the market in the meantime on the back of the apex bank’s intervention.
