• Saturday, April 13, 2024
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Naira appreciates further on increased dollar supply

Dollar nears N1,500 as scarcity hits black market

Naira on Wednesday strengthened further at the Investors’ and Exporters’ (I&E) forex window, Nigeria’s official foreign exchange (FX) market, following increased dollar supply.

After trading on Wednesday, the dollar was quoted at the rate of N740.08, which was stronger than N791.42 quoted on Tuesday, according to the data obtained from the FMDQ.

The dollar supply came from the willing buyers and willing sellers, which include exporters, banks and the Central Bank of Nigeria (CBN).

Consequently, the FX market recorded significant turnover, which rose by 197.34 percent to $153.28 million on Wednesday from $51.55 million on Tuesday, data from the FMDQ indicated.

Willing buyers and sellers maintained bids as high as N800 per dollar on Wednesday, which was stronger than N845/$1, bid on Tuesday.

The market auction also recorded lower bids of N730.00, the same level on Tuesday but weaker than N650.00 bids maintained on Monday at the I&E window.

At the parallel market, also known as black market, naira steadied at N867 per dollar. In some areas the cost of one dollar was as strong as between N850 and N862 as of Thursday morning.

Read also: Naira appreciates as demand moderates

Folashodun Shonubi, acting governor of the CBN, while briefing journalists on the outcome of the two-day Monetary Policy Committee (MPC) meeting in Abuja, said the current foreign exchange volatility being experienced will dissipate soon as pent-up demand is met while the market regulates to an effective and efficient level.

“We expect that overtime, the volatility we are seeing will normalise; the role of the central bank is to intervene and keep the market at a fairly stable level and as the market continues to oscillate around that level, there is need for us to intervene either by buying or selling,” Shonubi said.

At the money market on Wednesday, the Nigerian treasury bills (NT-Bills) secondary market closed on a flat note with the average yield across the curve remaining unchanged at 4.05 percent, a report from the FSDH research stated.

It noted that average yields across short-term, medium-term, and long-term maturities closed flat at 2.34 percent, 3.26 percent, and 5.01 percent, respectively.

The Overnight (O/N) rate decreased by 3.36 percent to close at 11.50 percent on Wednesday as against the previous close of 14.86 percent, and the Open Repo (OPR) rate decreased by 3.17 percent to close at 10.83 percent compared to 14.00 percent on the previous day.

According to the report, the Federal Government of Nigeria bonds secondary market closed on a negative note on Wednesday as the average bond yield across the curve cleared higher by 23 bps to close at 13.13 percent from 12.90 percent on the previous day.

Average yields across medium tenor and long tenor of the curve increased by 35 bps and 27 bps, respectively. However, the average yield across the short tenor of the curve declined by 1 basis point.

The March 23,2025 maturity bond was the best performer with a decrease in the yield of 1 basis point, while the March 17,2027 maturity bond was the worst performer with an increase in the yield of 74 bps. Furthermore, the secondary bond market is likely to remain subdued in the short term, analysts at FSDH research said.