Naira firms by 1.03% as banks pay remittances in dollar

Nigeria’s currency on Wednesday strengthened by 1.03 percent after banks commenced payment of Diaspora remittances in dollars to beneficiaries as directed by the Central Bank of Nigeria (CBN).

On November 30, the CBN said beneficiaries of diaspora remittances through the international monetary transfer operators (IMTO) shall have such inflows in foreign currency (US Dollar) through the designated bank of their choice.

The apex bank in a statement on the same day, signed by Ozoemena Nnaji, director of trade & exchange of CBN, said recipients of such remittances may have the option of receiving these funds in foreign currency cash or into their domiciliary account.

In compliance with the directive, banks issued notice to their customers saying they could walk into their branches to receive international money transfers in dollars.

Consequently, naira/dollar exchange rate, which fell to N483/& on Tuesday, reversed loss to strengthen to N478/$ on Wednesday, according to data on the abokifx.com.

Naira steadied at N480 to the dollar for the fifth time on Wednesday at the Bureau De Change (BDC) segment of the market.

Over 5,000 BDCs funded their accounts on Wednesday in anticipation for dollar disbursement by the CBN on Thursday.

At the Investors and Exporters (I&E) forex window, Naira appreciated by 0.08 percent as the dollar was quoted at N394.67 as against the last close of N395.00. Analysts at FSDH research said most participants maintained bids between N382.00 and N408.18 per dollar.

In the Treasury bills market, yields trended to their highest level in nearly a month supported by strong bearish trades, according to a report by Greenwich Merchant Bank Limited. On the back of sharp profit-taking, the average yield rose to 0.5%, 32bps north of its previous close.

The posture of the market markedly contrasts the broad apathy that kept yields at record-lows. Funding rates were benign, pressured by robust system liquidity which opened at N537.4bn from N221.3bn.

Accordingly, Over Night rate and Open Buy Back dipped to 0.9% and 0.7% on Wednesday relative to 1.3% and 0.8% on Tuesday.

“For the week, we expect the buoyant liquidity environment to support low funding rates,” analysts at Greenwich research said.

Despite buying-interests on long-dated bills, the Open Market Operation (OMO) market closed bearish, triggered by sustained sell-off on the short end of the market. As a result, the average yield saw an uptick of 8bps to close at 0.5%.

The Bond market extended its bear-run to the third consecutive session this week, as yields across the curve rose to average 4.4%, compared to 4.3% on Tuesday.

Across the tickers, investors sold the short end (+62bps) and belly of the curve (+5bps), even as the long end (-23bps) was dominated by positive sentiment. The 23-MAR-2025 instrument (+216bps) and 18-APR-2037 instrument (-122bps) saw the biggest yield increase and yield decline, respectively.