Naira falls to record low at official FX market

Despite increased dollar liquidity, Naira fell to an all-time low of N996.75 per dollar at the official foreign exchange (FX) market.

This shows 13.95 per cent depreciation compared to N874.71/$1 exchanged on Wednesday and 2.93 per cent weaker than N993.82/$1 quoted on October 30, 2023, at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to the data from the FMDQ.

The FX market recorded significant dollar supply from willing buyers and willing sellers but failed to shore up the value of naira due to increased demand for dollars.

Consequently, the daily FX market turnover increased by 101.32 percent to $228.54 million on Thursday from $113.52 million recorded on Wednesday.

The spot rate was as high as N1,100 per dollar on Thursday, weaker than N1,097.50/$1 on Wednesday and N744/$1 low rate, slightly weaker than the N745.00/$1 spot rate quoted on Wednesday.

At the parallel market, also known as the black market, the naira gained 1.75 percent against the dollar on Thursday as speculators played to watch and wait for game over expected government plans to increase dollar supply.

Read also Naira gains 1.75% as speculators watch government’s FX plans

Nigeria’s government plans to increase dollar supply with the expected $10 billion to digitalise FX transactions, discourage speculative demands, and hoard FX in cash.

At the money market on Thursday, the Nigerian Treasury bill (NT-Bills) secondary market closed on a positive note, with the average yield across the curve decreasing by 103 basis points to 13.37 percent from 14.40 percent on the previous day, according to a report by FSDH Research.

The average yields across short-term, medium-term and long-term maturities decreased by 199 bps, 185 bps, and one basis point. NTB January 25, 2024 (-405 bps) maturity bill witnessed maximum buying interest.

The Central Bank of Nigeria (CBN) held its scheduled Primary Market Auction on Wednesday, November 8, selling NT-Bills worth N497.20 billion across the 91-day (N4.52 billion), 182-day (N5.44 billion), and 364-day (N487.24 billion) tenors. The stop rates for the 91-day, 182-day, and 364-day tenor cleared higher at 7.00 percent (+110 bps), 11.00 percent (+200 bps), and 16.75 percent (+375 bps), respectively.

The auction was heavily oversubscribed by 182 percent, with bid-to-cover ratios settling at 3.55x (91-day), 6.06x (182-day), and 2.75x (364-day), the report stated.