Naira may stabilise as banks meet CBN’s dollar demand cut-off time

The nation’s currency, the naira, may strengthen this week as banks are expected to meet cut-off time for submission of customers’ dollar demand to get the required dollar supply from the Central Bank of Nigeria (CBN) at the inter-bank foreign exchange market.

This, analysts at Afrinvest believe, would reduce the rate of depreciation of the local currency.

The naira remained weak against the dollar as it depreciated consecutively on all days last week, as customers’ scramble for dollar from sources other than the CBN when the cut-off time for submission of customers’ mardollar demand is not met.

After trading below the N200/US$1 psychological level for six days, the naira depreciated 0.4% to N200.1/US$1 at the interbank on Monday and depreciated continuously to N2.99/US$1 W-o-W to close the week at N202.23/US$1 at the interbank.

In a bid to defend and reduce the pressure on the naira, the CBN closed the rDAS/wDAS window penultimate week after its last auction on Wednesday. Banks have been mandated to submit the total dollar demanded by customers through the inter-bank intervention process.

Hence, the information on the total dollar supply in the market has been undisclosed though the naira remains weak against the dollar as it has been depreciating consecutively on all days during the week, Afrinvest said in a report.

On the other hand, analysts at Cowry Asset Management Limited expect the Nigerian Inter-Bank Offered Rates (NIBOR) to witness relative stability this week as the impact of the N500.10 billion Federation Accounts Allocation Committee (FAAC) allocations trickles into the banking system.

This week also, treasury bills worth N254.97 billion will be auctioned on Wednesday, March 05, 2015, viz: 91-day bills worth N17.85 billion; 182-day bills worth N50 billion; and 364-day bills worth N187.12 billion while bills of equivalent value will also mature within the week.