• Sunday, May 19, 2024
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BusinessDay

FX turnover decrease to $9.76bn in August as liquidity challenges persist

BDC operators embark on crisis resolution

Nigeria’s total foreign exchange (FX) market turnover in August 2020 decreased by 9.80 percent to $9.76 billion from $10.82 billion recorded in July 2020 as the liquidity challenges in the FX market persist.

The foreign exchange market has witnessed dollar shortages since early this year as a result of sharp drop in oil prices, which accounts for about 90% of the country’s foreign exchange earnings and low inflows from remittances due to the Covid-19 pandemic.

Naira was stable on the black market and Bureau De Change (BDC) segment exchanging for N465 and 467 per dollar respectively at the close of trading on Thursday.

At the Investors and Exporters (I&E) FX market, Naira closed flat at N386.00 per dollar as most participants maintained bids between N383.00 and N390.84 per dollar, according to analysts at FSDH research.

The market opened with an indicative rate of N386.13k, which signalled naira appreciation by N0.31k over N386.44k opened with on Wednesday at the I&E window, data from FMDQ showed.

FX daily turnover rose by 42.57 percent to $98.69 million on Thursday from $69.22 million recorded on Wednesday.

BDCs across the country received some dollars from the Central Bank of Nigeria (CBN) on Thursday. The CBN resumed dollar sales to BDCs on Monday September 7, 2020 and had supplied over $200 million to the BDCs according to BusinessDay’s forex monitor. The Apex bank sells $10,000 twice weekly to this segment of the foreign exchange market.

At the money market on Thursday, NT-Bills market closed on a positive note with average yield across the curve declining by 6 bps to close at 1.61 percent from 1.67 percent on the previous day, according to a report by FSDH research.

Average yields across medium-term and long-term maturities compressed by 35 bps and 1 basis point, respectively, due to the maximum buying interest witnessed in the NTB 25-Feb-21 (-51 bps), NTB 11-Feb-21 (-43 bps), and NTB 28-Jan-21 (-37 bps) maturity bills. However, the average yield across short-term maturities increased by 15 bps.

In the Open Market Operation (OMO) bills market, the average yield across the curve declined by 6 bps to close at 1.75 percent against the last close of 1.81 percent. Buying interest was seen across short-term and medium-term maturities with average yields falling by 12 bps and 2 bps, respectively. However, the average yield across the long-term maturities remained unchanged at 2.14 percent. Yields on 6 bills declined with the 8-Oct-20 maturity bill registering the highest yield decline of 55 bps, while yields on 23 bills remained unchanged.