Naira Falls Again, Exchanges At N470/$ In Parallel Market

The Central Bank of Nigeria (CBN) data showed that spot rate or official exchange rate traded flat all week to close at N379/$1.

Similarly, at the parallel market, rates opened at N464/$1 and closed at N470.00/$1, depreciating N6.00 kobo week-on-week.

At the equities market, market capitalisation advanced by N2.1 trillion to N18.3 trillion within the week, while year-to-date return surged to 30.5 per cent.

At the Investors' & Exporters' (I&E) Window, the NAFEX rate opened at N386.21/$1.00 and closed at N386.00/$1.00 on Friday, unchanged from the prior week.

Activity level in I&E Window fell by 22.5 per cent to $561.3 million, from $723.9 million recorded in the previous week.

The weakening of the naira has been attributed to the drop in foreign reserves, which lost $31.6 million to close the week at $35.6 billion. Likewise, OPEC+ projection that demand for crude oil will dip in 2021 added to naira's woes.

Analysts at Afrinvest West Africa Limited said OPEC+ had revised down its oil demand forecasts for the remainder of the year and 2021 as a result of a weaker-than-expected economic outlook and a surge in COVID-19 cases.

OPEC+ expects oil demand to contract 0.9.8million/per barrel in 2020, a 0.3 million /per barrel from last month's assessment while in 2021, oil demand growth is projected to rise by 6.2 million/per barrel.

At the FMDQ Securities Exchange (SE) FX Futures Contract Market, the total value of open contracts of the Naira settled at $9.93 billion, up $19.1 million (+0.2 per cent) from $9.92 billion in the prior week.

Analysts predicted stronger forex demand this week due to the easing of lockdown across major economies, a move that will put pressure on the exchange rate in the near term.

Market analysis showed that performance in the T-bills market was bullish as excess funds from the primary auction filtered into the secondary market. Consequently, average yield across benchmark tenors declined 28 basis points week-on-week to close at 0.1 per cent.

At the close of the week, the mid-term instrument enjoyed the most buying interest as the average yields declined 52 basis points week-on-week to 0.1 per cent while yield on the short and long-term instruments dived 27 basis points and 4bps w/w to 0.1 per cent and 0.2 per cent respectively.

"In the coming week, we expect the CBN to resume its liquidity intervention as Open Market Operation (OMO) worth N103.1 billion would hit the system. We expect rates in the secondary T-Bills market to remain low due to huge money supply," analysts said.

The domestic bourse last week continued the positive run as market gained on all trading days save on Friday. Consequently, the benchmark index spiked 13 per cent week-on-week to 35,037.46 points, buoyed by sharp gains in Zenith (+21.7 per cent), BUA Cement (+20.9 per cent) and Dangote Cement (+14.6 per cent).

As such, market capitalisation advanced by N2.1 trillion to N18.3 trillion while year-to-date return surged to 30.5 per cent.

Also, there was a sharp increase in activity level as average volume and value traded rocketed 134.1 per cent and 160.4 per cent to 901.9 million units and N11.7 billion respectively.

The most traded stocks by volume were FBN Holdings (398.9 million units), Zenith (360.3 million units) and Access (263.2 million units) while Zenith (N9.3 billion), GTBank (N5 billion) and MTN Nigeria (N4.2 billion) led by value.

SOURCE