Naira firms against dollar as CBN auctions $298.9m

The nation’s currency, the naira, on Wednesday appreciated against the US dollar by 10 kobo at the inter-bank market following foreign exchange defence by the Central Bank of Nigeria (CBN).

The CBN offered a total of $300 million but sold a total of $298.9 million to 22 deposit money banks in the country at the official foreign exchange rate of N155.73/$ at its bi-weekly Retail Dutch Auction System (RDA).

Consequently, after trading on Wednesday the local currency closed at N162.40/$ compared to N162.50/$ the previous day, data from Financial Markets Dealers Quotations (FMDQ) have revealed.

The NGN was steady against the USD at the inter-bank (-1.3% YTD) on September 2, 2014. Inter-bank stability reflected robust USD supplies from CBN’s RDAS to the tune of USD349.83 million sold at USD1:NGN155.73, and to a lesser extent, USD inflows from oil companies.

According to Kunle Ezun of Economic Research, Ecobank Nigeria, in the meantime, the short term NGN outlook seems balanced and steady, but on the long term, the risk to the outlook is both on the upside and downside. The upside risks are driven by the weakening global commodities prices and gloomy global economic outlook.

Inter-bank rates on the other hand, rose by 0.72 percent to 52.57 percent from 52.19 percent the previous day. Overnight call on Wednesday increased from 11.79 percent the previous day to 11.83 percent. The same way 1 month tenor, 3 months and 6 months tenors climbed to 12.71 percent, 13.53 percent and 14.49 percent, respec6tively, from 12.59 percent, 13.46 percent, and 14.33 percent the previous day, according to data obtained from FMDQ.

The inter-bank rate fell by 22bp on September 2, 2014 reflecting a balanced outlook between market expectations of liquidity injection via treasury bills (NTBs and OMO) repayments and inter-bank funding requirements, a report from Ecobank Nigeria indicated.