The nation’s currency, Naira, on Monday depreciated further at the parallel market following renewed demand for dollars, especially from importers, traders told BusinessDay.
After trading at the foreign exchange popularly called black market, naira closed at N668 per dollar, representing 1.2 percent loss over dollar.
Naira also depreciated at the Investors and Exporters (I&E) forex window, Nigeria’s official foreign exchange market.
Consequently, after trading on Monday, the Naira closed at N431/$, which was a 0.67 percent drop compared to N428.12 closed on Friday at the official market.
Most currency dealers who participated at the FX auction maintained bids between N415.50 (low) and N444.00 (high) per dollar.
The foreign exchange market witnessed increased activity as the daily foreign exchange market turnover increased by 60.83 percent to $115.67 million on Monday from $71.92 million recorded on Friday data from the FMDQ indicated.
Demand pressure and limited foreign currency inflows triggered depreciation of the Naira, widening exchange rate premium, according to the FSDH macroeconomic report.
Other factors responsible for naira free fall include rising strong dollar, import demand, oil theft, fuel subsidies, currency speculation, record high money supply and weak productivity.
At the money market, the CBN is scheduled to roll over maturing bills worth N150.62bn at the NT-Bills Primary Market Auction (PMA) across the 91-, 182-, and 364-Day tenors.
“We anticipate an increase in interest rates across all tenors at this auction as investors wait patiently to invest,” said analysts at Afrinvest Securities Limited.
The analysts expect the bearish sentiment to be maintained ahead of the PMA as investors cover unfilled bids towards the end of the week.
Also, system liquidity (which stood at N74.9bn as of Friday 5th July 2022) is expected to be bolstered by NT-Bills maturity worth N264.28bn.
“We advise investors to trade cautiously prior to the outcome of the PMA and take advantage of attractive bills across the curve along with offers from corporates,” the analysts said.