FX Market: Vaccine Hopes Spark Optimism in the Oil Market

Following optimism for the distribution of vaccines across the world, Brent continues to gain positive momentum as it advanced 5.0% w/w to $54.4/bbl. amid anticipation for increased oil demand globally as inventories are depleted. In the same vein, external reserve balance increased marginally by 1.0% w/w to settle at $35.7bn.  

The local currency traded at ₦379.00 at the CBN spot market, unchanged from last week’s close. On the other hand, naira gained ₦16.75 at the Investors’ & Exporters’ (I&E) Window, settling at ₦393.50/$1.00 at the end of the week. At the parallel market, naira depreciated by ₦2.00 to close at ₦472.00/$1.00. Activity level in the I&E Window decreased by 73.4% to $141.2m from the previous week.

The total value of open contracts of the naira at the FMDQ Securities Exchange (SE) FX Futures Contract Market rose 2.7% ($215.99m) to close at $8.4bn. The MAY 2021 instrument (contract price: ₦413.14m) recorded the highest subscription of $100.0m which took total value to $924.9m. On the other hand, the AUGUST 2021 instrument (contract price: ₦421.93) received the least subscription worth $0.9m, bringing its total value up to $302.4m. We expect the exchange rates to remain range-bound at the official market and the I&E window.