Naira Appreciates Against Dollar at Investors/Exporters Window

Naira Appreciates Against Dollar at Investors/Exporters Window

This week, the Nigerian local currency, Naira, bucked negative trend appreciates against the United States dollar at the investors and exporters window. Foreign exchange market data indicates that Naira strengthened by 0.24% against the greenback at the window to close at N410.00 per USD.

This happened as the external reserves moderated by 0.27% to close at N35.12 billion. However, Naira depreciated at the Bureau De Change and Parallel “black” markets by 0.42% and 0.62% to close at N480.00/USD and N485.00/USD respectively.

Meanwhile, Naira exchange rate closed flat at N380.69 to a dollar at the Interbank Foreign Exchange market amid weekly injections of USD210 million by CBN into the forex market.

Analysts noted the injection was split with USD100 million allocated to Wholesale Secondary Market Intervention Sales (SMIS), USD55 million was allocated to Small and Medium Scale Enterprises and USD55 million was sold for invisibles.

Elsewhere, the Naira to dollar exchange rate fell (Naira appreciated) for most of the foreign exchange forward contracts.

These include the 2 months, 6 months and 12 months exchange rates fell by 0.09%, 0.01% and 0.13% to close at N416.32/USD, N428.59/USD and N447.69/USD respectively.

However, the 1 month and 3 months exchange rates rose by 0.21% and 0.04% to close at N413.70/USD and N419.70/USD respectively; while spot rate closed flat at N379.00/USD.

In the new week, analysts at Cowry Assets Management said they expect Naira to weaken against the USD at most FX Windows as crude oil prices falls amid fresh concerns about another wave of the COVID-19 pandemic.

This week, fresh lockdown across India and Asia at large ignited some oil demand concerns in the market. Consequently, oil prices decreased mildly by 1bp w/w to close at $65.91/bbl).

NIBOR Falls For Most Tenor Buckets amid Financial Liquidity Ease.

In the just concluded week, CBN issued a total of N12.84 billion at the open market operations (OMO) auction to partly drain system liquidity as OMO bills worth N20.00 billion matured. Given the net inflows worth N7.16 billion, Nigerian Interbank Offered Rate (NIBOR) moderated for most tenor buckets.

Specifically, Overnight funds, NIBOR for 1 month and 6 months tenor buckets fell to 14.83% (from 21.33%), 7.32% (from 7.72%) and 9.03% (from 9.12%) respectively.

However, NIBOR for 3 months rose to 8.58% (from 8.31%).

Meanwhile, Nigerian Interbank Treasury Bills True Yield (NITTY) rose for all maturities tracked ahead of the upcoming primary auction. NITTY for 1 month, 3 months, 6 months and 12 months maturities climbed to 1.99% (from 1.97%), 2.62% (from 2.54%), 3.89% (from 3.84%) and 8.48% (from 8.27%) respectively.

Next week T-bills worth N128.45 billion will mature via the primary and secondary markets to more than offset the T-bills worth N88.45 billion which will be auctioned by CBN via the primary market; viz: 90-day bills worth N11.38 billion, 182-day bills worth N6.00 billion and 364-day bills worth N71.07 billion.

“We expect the stop rates of the new issuances to increase, especially for the 364-day bill”, analyst at Cowry Asset Management stated.

Naira Appreciates Against Dollar at Investors/Exporters Window