FX dealers trade $19m on FMDQ in 23 spot deals

Nigeria’s currency traded flat at an average of N307 per dollar yesterday, data from the FMDQ website showed.

The local currency touched a high of N315/dollar as FX spot dealers traded $19.06 million in 22 deals.

Dealers had expected a more quiet start to the FX market this week, with the pace of demand of the greenback expected to depend on the outcome of today’s monetary policy committee (MPC) meeting.

On the FMDQ platform yesterday, the local currency opened for trade at N302.10/USD while dealers traded $1.98million. At 2.35pm, naira/USD spot deal rate stood at N310.50 when $6,024.88 was the traded volume. The highest deal volume of $5million was done at N310, FMDQ spot market data showed.

FX spot dealers were closely watching today’s outcome of the Central Bank of Nigeria (CBN) 2 day MPC meeting which began yesterday. The apex bank has shown keen interest in credible price formation for the spot foreign-exchange market.

The naira has seen significant pressure as the FX spot market is witnessing significant volatility. 

The CBN has been mopping up naira liquidity to shore up debt yields. But the lack of dollar liquidity has curbed interbank activity, leaving the apex bank as the main supplier of dollars.

Meanwhile, the apex bank had last week settled $697 million of one-month outright currency forwards it sold in June at an exchange rate of N280 per dollar. The $697 million is part of $4 billion auctioned after the naira was floated last month to help clear a backlog of demand for dollars.

Outstanding forwards sold by the Central Bank also include $1.22 billion of two-month contracts and $1.57 billion due in three months.

Nigeria petro-dollar revenue has been devastated by falling crude prices and attacks on oil and gas facilities in the southern Niger Delta energy hub that have cut oil production from 2.2 million bpd to 1.5 million since January.

Udoma Udo Udoma, minister of budget and national planning,  outlining the country’s three-year fiscal plan Monday, said Africa’s biggest economy is assuming an oil price of $42.5 per barrel and output of 2.2 million barrels per day (bpd) in 2017.

Oil prices fell to two and half -month lows on Monday, on rising concerns that a global glut of crude and refined products would weigh on markets, delaying a long-anticipated rebalance in the market.

Brent crude futures were down 89 cents at $44.80 a barrel by 11:13 a.m. EST (1513 GMT), their lowest since May 10. U.S. crude was down 93 cents at $43.26 a barrel, after touching a low of $43.18, also the lowest since May 10.

IHEANYI NWACHUKWU