Naira may strengthen on expected dollar sales by IMTOs

The naira may regain strength over the US dollar following expected supply to Bureau De Changes (BDCs) from the International Money Transfer Operators (IMTOs) next week, as the foreign exchange market fully resumes activity.

In the absence of any major dollar supply this week, the naira has relatively traded stable across segments of the foreign exchange market.

Specifically, the nation’s currency has remained stable, closing at N305 per dollar since last week at the interbank spot market, according to data from the FMDQ.

At the parallel market, the naira, which traded at N490/$ since last week, depreciated in value on Thursday by N3 or 0.61 percent to close at N493/$.

Aminu Gwadabe, acting president, Association of Bureau De Change Operators of Nigeria (ABCON), had told BusinessDay that the foreign exchange market would resume fully next week when the BDCs start getting allocation from the IMTOs.

The Central Bank of Nigeria (CBN) on Wednesday auctioned N173.85 billion ($550m) at its first treasury bill sale of the year with yields unchanged from the previous auction held December 21, fixed income traders said on Thursday.

The apex bank sold N115.85 billion of one-year debt at a rate of 18.68 percent, the same as the previous auction, traders told Reuters.

The traders disclosed also that the CBN sold N35 billion of 91-day paper at 14 percent and N22 billion of six-month bills at 17.5 percent, unchanged from the previous auction.

The report stated that subscription at the auction came to N194.12 billion, well up from N42.68 billion at the previous auction.
Nigeria’s central bank issues treasury bills regularly to help lenders manage their liquidity, curb rising inflation and provide naira to help the government fund its budget.