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Naira weakens as external reserves decline by $52.10m

Nigeria’s currency on Monday weakened across black market and the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) as liquidity slumps.

Naira depreciated by N1.00k as the dollar traded at N459 on Monday from N458 since almost two weeks ago on the black market.

The local currency also fell by N0.50k after the dollar was quoted at N386.50k on Monday as against N386.00k quoted on Friday and Thursday last week at the Investors and Exporters (I&E) forex window, data from the FMDQ indicated.

However, naira was also stable at the retail bureau and the official market where the dollar was quoted at N460 and N361.00k.

Earlier in the morning, the foreign exchange market opened with an indicated rate of N387.00k at the I&E window, which represented a marginal depreciation of N0.14k when compared with N386.86k opened with on Friday last week.

The foreign exchange daily turnover declined significantly by 90.34 percent to $10.15 million on Monday from $105.05 million recorded on Friday last week.

The Central Bank of Nigeria (CBN) recorded FX reserve drawdown for the fifth consecutive week as forex outflows outpaced inflows. External reserves declined by $52.10 million week-to-date (WTD) to $36.16 billion.

The I&E FX market remained subdued due to tight liquidity conditions. Naira weakened by 0.13 percent as the dollar was quoted at N386.50 as compared to N386.00 on the previous day. Most participants maintained bids between N383.00 and N391.45 per dollar, a report by FSDH research stated.

At the money market, the Nigerian treasury bills closed on a positive note on Monday, with average yield across the curve declining by 1 basis point to close at 2.08 percent.

In the Open Market Operation (OMO) bills market, average yield across the curve declined by 1 basis point to close at 5.15 percent.

Money market rates are likely to decline further later in the week, as OMO maturities worth N16.00 billion are expected to support the system liquidity.

The Overnight (O/N) rate declined by 2.50 percent to close at 21.00 percent. The Open Buy Back (OBB) rate also declined by 1.90 percent to close at 19.60 percent.

The FGN bond market closed on a positive note on Monday, as the average bond yield across the curve cleared lower by 7 bps to close at 4.67 percent.

“We expect moderate demand in the Bonds market due to the relatively attractive yields as compared to the NT-bills market,” analysts at FSDH research said.


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