Naira trades stable as dealers await CBN’s dollar sale today

The naira on Tuesday closed stable against the dollar at Bureau de Change (BDC) segment of the foreign exchange and parallel market, as dealers await dollar sales from Central Bank of Nigeria (CBN) today.

It closed at N221/$ and N223/$ at BDC and parallel market, respectively, while the CBN’s interbank clearing rate remained stable at N197.00k/$. The CBN will today make intervention dollar sale of about $30,000 to each BDC.

However, the local currency weakened slightly against the dollar at the interbank foreign exchange market by N0.05k/$ or 0.03 percent as it closed at N197.67k/$ compared with N197.62k/$ the previous day, according to data from FMDQ.

Naira on Monday weakened further against the dollar at the BDC segment of the foreign exchange and the parallel market due to strong demand by end users to meet obligations such as school fees payment and pilgrimage, among others.

Money market rates sustained a southward trend (-0.62%) as liquidity continues to improve within the financial system, according to analysts at Meristem Securities Limited. The OBB and OVN rates, respectively, pared by 0.58 percent and 0.66 percent to peg the average rate at 7.84 percent.

However, mixed activities ensued in the interbank space, as the CALL (-0.92%) and the 6M (-0.19%) rates waned, while the 3M and 6M rates advanced by 0.21 percent and 0.24 percent accordingly. Across board, average NIBOR declined by 0.16 percent to settle at 14.76 percent.

The shorter termed fixed income instruments enjoyed a bullish run, as yields trended southwards across all tenors, save for the 1M and 3M tenors that climbed by 0.61 percent and 0.11 percent accordingly. Consequently, average yield pegged at 14.52 percent. We believe the attractive yields of the longer termed instruments, skewed investors’ sentiment towards the 6M (14.91%), 9M (15.75%) and 12M (15.86%) instruments.

Average yield (15.27%) across bond instruments retained the previous day’s position, as the increase in yields of four bond instrument offset the declines recorded by other instruments.