Naira begins year with marginal gains against dollar

Nigeria’s Foreign Exchange (FX) market resumed for the new year on Tuesday, with Naira gaining against the dollar at official and parallel markets.

At the Investors and Exporters (I&E) forex window, Nigeria’s official FX window, the Naira gained 0.11 percent as the dollar was quoted at N461.00/$ on Tuesday compared to N461.50/$ quoted on Friday, the last trading day for 2022.

This is in spite of the drop in the level of activity at the Investors and Exporters window.

The daily foreign exchange market turnover declined by 12.93 percent to $153.45 million on Tuesday from $176.24 million recorded on Friday, data from the FMDQ indicated.

Most currency dealers who participated in the FX auction on Tuesday maintained bids between N440.00 (low) and N462.00 (high) per dollar.

At the parallel market also known as the black market, the local currency appreciated by 0.27 percent to close at N738 per dollar on Tuesday as against N740 on Friday.

“The market is a bit calm, there is not much demand for dollars,” a trader told BusinessDay on Tuesday.

At the money market, the Nigerian treasury bills secondary market closed on a flat note on Tuesday with the average yield across the curve closing flat at 5.29 percent, according to a report by FSDH research.

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Average yields across short-term, medium-term, and long-term maturities closed flat at 3.32 percent, 4.75 percent, and 7.81 percent, respectively.

The Overnight (O/N) rate decreased by 1.50 percent to close at 9.83 percent as against the last close of 11.33 percent, while the Open Repo (OPR) rate decreased by 2.25 percent to close at 9.50 percent compared to 11.75 percent on the previous day.

In the Open Market Operation (OMO) secondary market, the average yield across the curve closed flat at 3.36 percent on Tuesday as average yields across short-term and medium-term maturities remained unchanged at 3.52 percent and 3.03 percent, respectively, the report noted.

Moreover, the CBN held an OMO auction on December 29, selling bills worth N30.00 billion across the 89-day (N5.00 billion), 187-day (N5.00 billion), and 362-day (N20.00 billion) tenors.

The stop rates for the 89-day and 187-day tenor remained unchanged at 7.00 percent and 8.50 percent, respectively. However, the stop rate for the 362-day tenor cleared lower at 10.00 percent (-10 bps). The auction was oversubscribed, indicating a subscription level of 552 percent (N165.65 billion). Demand was skewed towards long tenor maturity bills with bid-to-cover ratios settling at 4.26x for 89-day, 4.16x (187-day), and 6.18x (362-day).

On Tuesday, the Debt Management Office (DMO) has started offering a 2-Year FGN Savings Bond due January 11, 2025, and a 3-Year FGN Savings Bond due January 11, 2026, at the interest rate of 9.600 percent per annum and 10.600 percent per annum, respectively.

The bond auction is scheduled to close on January 6, with settlement on January 11, 2023. The interest will be paid quarterly, with a redemption bullet repayment on maturity.