Nigeria’s currency, naira, on Wednesday strengthened further across foreign exchange market following a moderation in demand for dollars and slight improvement in supply.
After trading on Wednesday, naira closed at N640 per dollar, gaining 3.12 percent over N660 closed on the previous day at the parallel market popularly called the black market.
“There is enough dollars in the market now and demand is low,” one trader told BusinessDay on Wednesday.
The local currency had last week peaked at the rate of N710 per dollar following increased demand at the black market as the banks could not meet the genuine demand for forex by end users due to shortage of dollars at the official market.
The foreign exchange market began to witness appreciation in naira after the Central Bank of Nigeria (CBN) assured of its commitment to resolving dollar issues.
At the official market, also known at the Investors and Exporters (I&E) forex window, naira gained 0.34 percent as the dollar was quoted at the rate of N429.20 on Wednesday as against N430.67 quoted on Tuesday, data from the FMDQ indicated.
Most currency dealers who participated at the FX auction maintained bids between N414.00 (low) and N444.00 (high) per dollar.
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The daily foreign exchange market turnover declined by 21.99 percent on Wednesday to $123.78 million from $158.68 million recorded on Tuesday, data from the FMDQ showed.
In the face of rising demand for foreign exchange for both goods and services by Nigerians, the Central Bank has advised Nigerians to resist the urge of succumbing to the speculative activities of some players in the foreign exchange market.
At the money market on Wednesday, the Overnight (O/N) rate remained unchanged at 15.00 percent, while the Open Repo (OPR) rate increased by 0.17 percent to close at 14.50 percent compared to 14.33 percent on the previous day.
The Nigerian Treasury bills secondary market closed on a flat note on Wednesday with the average yield across the curve closing flat at 6.56 percent. Average yield across short-term, medium-term, and long-term maturities remained unchanged at 9.16 percent, 5.86 percent, and 6.32 percent, respectively, according to a report by the FSDH Research.
FGN bonds secondary market closed on a mildly negative note on Wednesday, as the average bond yield across the curve cleared higher by 9 bps to close at 12.52 percent from 12.43 percent on the previous day. Average yields across medium tenor and long tenor of the curve expanded by 1 basis point and 15 bps, respectively. However, average yield across the short tenor of the curve remained unchanged.
The 18-APR-2037 maturity bond was the worst performer with an increase in the yield of 90 bps
The secondary bond market is likely to remain subdued in the short term.