Naira, Nigeria’s currency on Wednesday strengthened against the dollar at the official market as foreign exchange liquidity improved after the two days holiday, traders said.
The daily foreign exchange market turnover increased by 25.0 percent to $60.84 million on Wednesday from $48.67 million recorded on Friday before the holiday declared by the Federal Government.
After trading on Wednesday, which was the first trading day in the week after the holiday, naira appreciated by 0.36 percent as the dollar was quoted at N424.58, compared to N427.75 quoted on Friday, at the Investors and Exporters (I&E) forex window, data from the FMDQ indicated.
Most foreign exchange market dealers who participated in the auction on Wednesday maintained bids at N411.42 (low) and N444 (high).
Read also: Naira strengthens amid low FX turnover
At the parallel market, also known as the black market, the local currency depreciated by N3 to N618 per dollar (selling price) from N615 (buying price).
Last week, the exchange rate at the I&E window weakened by 0.27 percent to N426.13/US$1, its lowest level since end-December 2021, according to a report by Coronation Research.
The foreign exchange (FX) reserves of the Central Bank of Nigeria (CBN) increased by 0.44 percent to US$39.34bn, the highest level since May 5, 2022, enhancing the ability of the CBN to continue interventions across the various FX windows.
Oil prices and production are now giving visible support to the FX reserves of the CBN whose confidence in being able to defend the current I&E window rate, or something very close to it, must have risen. “We expect these rates to persist for several months at least,” said analysts at Coronation Research.
Last week, the price of Brent fell to as low as US$100.69/bbl, its lowest level since 7 April, before settling at US$107.02/bbl. The 4.13 percent w/w drop marked Brent’s second successive weekly loss and the most in the three weeks. Nonetheless, Brent is up 37.59 percent year-to-date and has traded at an average of US$105.05/bbl, 48.19 percent higher than the average of US$70.89/bbl in 2021.
At the money market, the Overnight (O/N) rate remained unchanged at 14.00 percent, and the Open Repo (OPR) rate remained unchanged at 13.83 percent, a report by FSDH Research stated.
The Nigerian treasury bills secondary market closed on a negative note on Wednesday, with the average yield across the curve increasing by 11 bps to 7.09 percent from 6.98 percent on the previous day. Average yield across short-term maturities expanded by 55 bps.
However, average yields across medium-term and long-term maturities declined by 1 basis point each. NTB 11-Aug-22 (+110 bps) maturity bill witnessed heavy selling pressure.
