Demand pressure pushes naira to new low of N740 per dollar

Naira on Thursday fell to a record new low of N740 per dollar at the parallel market due to increased demand for foreign exchange (FX).

After trading on Thursday the local currency lost N15 (2.03 percent) to the dollar which traded at N725/$ on Tuesday.

With the latest rate, Naira has depreciated by N175 (23.65 percent) when compared with N565/$ at the beginning of the year.

At the Investors and Exporters window (I&E) forex window, Naira appreciated marginally by 0.02 percent as the dollar was quoted at N436.25 on Thursday as against the last close of N436.33 on Wednesday.

Most currency dealers who participated at the foreign exchange auction on Thursday maintained bids between N420.50 (low) and N438.45 (high) per dollar.

At the money market segment, the Overnight (O/N) rate increased by 2.92 percent to close at 10.17 percent on Thursday as against the last close of 7.25 percent on the previous day.

The Open Repo (OPR) rate increased by 2.67 percentage points to close at 9.67 percent on Thursday as against the last close of 7.00 percent on Wednesday.

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Money market rates increased by an average of 280 bps following the FX retail auction by the CBN, a report by FSDH research stated.

The Nigerian treasury bills (NT-Bills) secondary market closed on a positive note on Thursday with the average yield across the curve decreasing by 35 bps to 7.45 percent from 7.80 percent on the previous day.

Average yield across the medium-term maturities declined by 91 bps. However, average yields across short-term and long-term maturities closed flat at 6.49 percent and 6.08 percent, respectively. NTB 9-Mar-23 (-274 bps) maturity bill witnessed heavy buying interest.

In the Open Market Operation (OMO) secondary market, the average yield across the curve closed flat at 11.11 percent on Thursday. Average yields across short-term, medium-term, and long-term maturities remained unchanged at 11.36 percent, 10.96 percent, and 11.15 percent, respectively.

The report noted that FGN bonds secondary market closed on a flat note on Thursday, as the average bond yield across the curve closed flat at 13.13 percent. Average yield across the long tenor of the curve remained unchanged. However, average yield across the short tenor of the curve declined by 1 basis point, while average yield across medium tenor of the curve increased by 1 basis point. The 14-MAR-2024 maturity bond was the best performer with a decrease in the yield of 1 basis point, while the 17-MAR-2027 maturity bond was the worst performer with an increase in the yield of 5 bps.