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Naira gains N2.07k against dollar on offshore bid for fixed assets

naira

The naira yesterday gained significantly against the US dollar by 1.27 percent or N2.07k at the inter-bank market following foreign investors bid for naira fixed-income assets.

Also, the naira appreciation was attributed to dollar sales by the Nigerian National Petroleum Corporation (NNPC) on Wednesday which sold about $450 million to some banks, while flows from offshore investors participating in Treasury bill auction further boosted support for the naira.

Consequently, naira yesterday closed at N160.86/$ compared to N162.93/$ traded the previous day, data from the Financial Markets Dealers Quotation (FMDQ).

“It looks like the bullish external risk environment is pushing foreign investors to come back to the Nigerian market”, Samir Gadio, a London-based emerging-markets strategist at Standard Bank Group Ltd., said in e-mailed comments to Bloomberg.

The CBN on Wednesday offered a total of $400 million but sold a total of $278.9 million to 17 deposit money banks at the rate of N155.74/$ at its bi-weekly Retail Dutch Auction System (RDAS).

Estimated aggregate demand for foreign exchange by authorised dealers under the retail Dutch Auction System (rDAS), bureau de change (BDC) and rDAS-forward contract was US$6.79 billion in January 2014.

This indicated an increase of 56.9 percent and 495.9 percent above the levels in the preceding month and the corresponding month of 2013, respectively.

The rise in aggregate demand was attributed to the 58.9 percent and 37.4 percent increase in demand at the rDAS-spot and BDC segments of the market.

A total of US$4.04 billion was sold by the CBN to authorised dealers during the period, reflecting an increase of 42.9 percent and 296.3 percent above the levels in the preceding month and the corresponding period of 2013, respectively.