The Naira on Monday weakened against the dollar by 0.41 percent, at the Bureau De Change (BDC) segment of the foreign exchange (FX) due to increased demand for the greenback by the end-users.
Read Also: Naira closes the week lowest since March as turnover declines 19.55%
After trading on Monday the naira/dollar exchange rate closed at N485 per dollar as against N483 closed on Friday.
Over 5,000 BDC operators funded their accounts on Monday in anticipation of dollar disbursement by the Central Bank of Nigeria (CBN) on Tuesday. The CBN sells $10,000 twice weekly to BDC operators across the country.
Foreign exchange cash sales to BDC operators fell by 19.3 percent to US$0.42 billion in January 2021 according to a report by the CBN.
Similarly, naira fell by 0.20 percent to N486 per dollar on Monday compared to N485/$ traded on Friday on the parallel market.
Naira gained by 0.18 percent as the dollar was quoted at N411.25k on Monday from N412.00k quoted on Friday at the Investors and Exporters (I&E) forex window, data from the FMDQ indicated.
Currency traders who participated in the trading on Monday maintained the bids between N387.67k and N420.50k/$.
The daily foreign exchange turnover increased significantly by 136.13 percent to $211.86 million on Monday from $89.72 million recorded on Friday.
At the money market, the CBN will on Wednesday, conduct its bi-weekly NT-Bills Primary Market Auction (PMA) rolling over a total of N63.2bn across the 91-Day (N24.2bn), 183-Day (N19.2bn), and 364-Day (N19.8bn) tenors.
“We expect decent demand levels as investors anticipate slightly improved yields,” analysts at Afrinvest Securities Limited said.
The analysts expect NT-Bills secondary market players to remain on the sidelines this week, in anticipation of the PMA. Furthermore, as financial system liquidity remains pressured (N577.6bn negative as of Friday, 21-May-21), “we believe the bearish run would be sustained this week,” they said.
Investors are advised to remain cautious, taking a position in short to medium term NT-Bills as we expect further advancement in yields during the week. In addition, qualified investors can partake in the NT-Bills PMA and stay alert for prime corporate offerings (commercial papers or bonds) that may offer higher yields.
The Nigerian Treasury Bills secondary market performance unsurprisingly maintained a bearish outing throughout last week, due to persistently low financial system liquidity (N192.0bn negative as of last Monday, 17-May-21). Consequently, average yield across all tenors inched 70bps higher W-o-W to 5.76 percent from 5.06 percent the previous week.
