Nigeria’s currency on Friday gained 0.28 percent against the dollar at the official market, a day after Godwin Emefiele, governor of the Central Bank of Nigeria insisted on a managed float exchange rate regime.
After trading on Friday the dollar was quoted at N418.33, lower than the last close of N419.50. Most currency dealers who participated in the auction maintained bids between N410.00 (low) and N444.00 (high) per dollar.
Emefiele who spoke on the side line of the on-going 2022 Spring Meetings of the International Monetary Fund/World Bank Group, said the official exchange rate had been adjusted from N155 per dollar in 2015 to N420/$.
On the CBN’s website, the exchange rate stood at N416.08/$ as at April 21, 2022, while at the parallel market, naira exchanged with the dollar at N587 on Friday.
The CBN in July 2021 stopped dollar sales to the Bureau De Change (BDCs) following what it described as forex infractions.
The gap between the official and parallel market exchange rates (premium) widened to N171.83 per dollar at the end of first quarter 2022 from N106.33 per dollar on Wednesday July 28, a day before the apex bank suspended dollar sales to BDCs.
Africa’ largest economy’s gross official reserves declined by $317m (-0.8%) month/month to $39.5 billion in March 2022.
The drop was the fifth in a row as the reserves have been depleting by roughly $451m on average on a monthly basis since November 2021, according to a report by FBNQuest.
Foreign exchange reserves have been under pressure following Nigeria’s low crude oil output, which has been exacerbated by oil theft and pipeline vandalisation.
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Another factor is the NNPC’s deduction of subsidy claims from source before making remittance to the federation account.
According to OPEC’s monthly oil report for March, Nigeria’s crude oil output (excluding condensates) averaged around 1.4 million barrels per day (mbpd) in January and February 2022, far below its OPEC production quota of about 1.73mbpd.
However, Nigeria’s external reserves have started growing since the beginning of this month. The foreign exchange reserves have increased by 0.69 percent to $39.811 billion as of April 21, 2022, compared to $39.537 billion in April 1, 2022, data from the Central Bank of Nigeria (CBN) indicated.
At the money market on Friday the Overnight (O/N) rate decreased by 1.50 percent to close at 5.67 percent as against the last close of 7.17 percent, and the Open Repo (OPR) rate also decreased by 1.50 percent to close at 5.00 percent compared to 6.50 percent on the previous day, a report by the FSDH research noted.
The Nigerian Treasury Bills (NT-Bills) secondary market closed on a mildly positive note on Friday with the average yield across the curve decreasing by 2 bps to 3.73 percent from 3.75 percent on the previous day.
Average yield across the medium-term maturities declined by 8 bps. However, the average yields across short-term and long-term maturities remained unchanged at 3.06 percent and 4.38 percent, respectively. NTB 13-Oct-22 (-17 bps) maturity bill witnessed maximum buying interest.
