• Thursday, February 22, 2024
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Naira slide continues despite CBN’s forex auction


The naira yesterday weakened against the US dollar losing 24 kobo at the inter-bank market in spite of the Central Bank of Nigeria’s (CBN) foreign exchange auction.

The naira value had on Tuesday fallen to N172 to the dollar on the parallel market and closed N164.46 on the inter-bank market, losing 0.81 percent despite Shell selling an undisclosed sum, while ExxonMobil sold $50 million and Addax selling $8 million.

The CBN on Wednesday offered a total of $400 million but sold a total of $398.7 million to 21 deposit money banks (DMBs) that participated in the bi-weekly Retail Dutch Auction System (RDAS) at the rate of N155.75/$.

However, the naira yesterday closed at N164.80/$ as against N164.56/$ traded the previous day at the inter bank data from Financial Markets Dealers Quotations (FMDQ) show.

On Wednesday, the external reserves ebbed to $40.56 billion from $40.6 billion on Tuesday. It would be recalled that the pressure on the naira heightened on Tuesday after reports that Bank of America suddenly downgraded naira-linked instruments on fears of further value hemorrhage in the market.

Analysts attributed naira depreciation to increased demand for dollar by end users as there was no major event that happened at the foreign exchange market.

It has been reported that the local currency is at risk of being devalued after President Goodluck Jonathan suspended the central bank governor last week, eroding confidence in monetary policy and sending the naira to a record low.

Inter-bank rates at the money market yesterday rose across tenor buckets by 0.41 percent from 12.27 percent the previous day to 12.32 percent.

Consequently, while the Nigeria Inter-Bank Offered Rates (NIBOR) for call climbed from 11.45 percent the previous day to 11.54 percent, 7 days, 30 days, 60 days and 90 days tenors rose to 11.83 percent, 12.08 percent, 12.33 percent and 12.58 percent from 11.75 percent, 12.00 percent, 12.29 percent, and 12.54 percent, respectively, the previous day, according to FMDQ data.

However, inter-bank rates are expected to moderate following maturing treasury bills worth N267.85 billion expected to hit the financial system. The maturities will consist of 35-day bills worth N72.53 billion; 119-day bills worth N85.01 billion; 91-day bills worth N20.65 billion; 120-day bills worth N30.65 billion and 128-day bills worth N79.65 billion.