LAGOS, (CAJ News) – DESPITE the restoration of the spread limits on United States dollar offers, the Nigeria Naira is poised for further weakness as a lack of liquidity strangles interbank trade, analysts said.
According to Rand Merchant Bank (RMB), volumes are almost non-existent, with a whole of two transactions being recorded over the past two days.
The financial house noted the central bank had been notably absent from the market but was likely to make a reappearance over the next two days as $700 million one-month onshore NDFs/futures, that it carried out on June
20, was due.
“Given a lack of meaningful US dollar inflows over the past month, the CBN is likely to fall back on its reserve holdings to settle the outstanding amount,” RMB projected.
RMB noted the rising depreciatory risks are reflected in offshore pricing as well as the parallel market rate which was teetering below its June high of $/N370.
“Persistent exchange rate uncertainty will continue to deter offshore investment in local currency assets.”
– CAJ News