Nigeria’s currency gained N2.50k as the dollar traded at an average rate of N463.50k on Thursday from N466 on Wednesday on the black market.
The naira appreciation was due to improved liquidity in the market. Bureau De Change (BDC) operators received some dollar allocation from the Central Bank of Nigeria (CBN) on Wednesday.
The CBN resumed dollar sales to BDCs on Monday September 7, 2020 and had supplied over $200 million to the BDCs. The Apex bank sells $10,000 twice weekly to this segment of the foreign exchange market.
Also, the foreign exchange market witnessed improved liquidity as the daily turnover at the Investors and Exporters (I&E) forex window increased significantly by 410.19 percent to $284.23 million on Wednesday from $55.71 million recorded on Tuesday, data from FMDQ indicated.
Naira remained stable at N386.00 per dollar for the fourth consecutive day on Thursday at the I&E window. Analysts at FSDH research said most participants maintained bids between N380.50 and N395.13 per dollar.
The analysts said FX liquidity remained low as the dollar supply continues to dwindle amid persistent demand pressures.
Nigeria’s currency-in-circulation dropped by 0.84 percent to N2.37 trillion in August 2020 from N2.39 trillion at the end of July 2020, according to the CBN website.
Currency in circulation according to Investopedia.com is all of the money that has been issued by a country’s monetary authority, minus cash that has been removed from the system. Currency in circulation represents part of the overall money supply, with a portion of the overall supply being stored in checking and savings accounts.
At the money market, the NT-Bills market closed on a flat note with average yield across the curve remaining unchanged at 1.72 percent, a report by FSDH research showed.
The CBN conducted the Primary Market Auction on September 16, selling NT-Bills worth N158.75 billion across the 91-day (N2.00 billion), 182-day (N8.39 billion), and 364-day (N148.36 billion) tenors. The stop rates for the 91-day and 182-day tenors cleared lower at 1.09 percent (-1 basis point) and 1.50 percent (-5 bps), respectively, while the stop rate for the 364-day tenor closed flat at 3.05 percent. The auction was oversubscribed, indicating a subscription level of 129 percent (N204.17 billion). Demand was skewed towards short tenor bills with bid-to-cover ratios settling at 2.00x (91-day), 1.84x (182-day), 1.25x (364-day).
In the Open Market Operation (OMO) bills market, the average yield across the curve declined by 3 bps to close at 2.31 percent as against the last close of 2.34 percent. Buying interest was seen across short-term, medium-term, and long-term maturities with average yields falling by 4 bps, 2 bps, and 2 bps, respectively. Yields on 13 bills declined with the 24-Sep-20 maturity bill registering the highest yield decline of 31 bps, while yields on 2 bills advanced with the 5-Jan-21 maturity bill recording the highest yield increase of 6 bps.
