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Naira falls to N746 as dollar demand rises

Will 2024 be the year of the Naira?

Naira on Thursday weakened against the dollar at the unofficial market due to an increase in demand for the greenback.

After trading on Thursday, naira depreciated by 0.26 to close at N746 per dollar compared to N744 closed on Wednesday at the parallel market.

The local currency appreciated marginally at the Investors and Exporters (I&E) forex window by 0.06 percent as the dollar was quoted at N462.73/$ on Thursday as against N463.02 on Wednesday, data from the FMDQ indicated.

Most currency dealers who participated at foreign exchange market auction on Thursday maintained bids between N460.00 (low) and N467.00 (high) per dollar.

The daily foreign exchange market turnover increased by 79.88 percent on Thursday to $178.68 million from $99.33 million on Tuesday.

On Wednesday recorded a sharp fall in the value of naira following increased demand for dollars by importers at the parallel market, also known as the black market.

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The demand for the dollar was mostly from importers, particularly, from those who deal in oil and gas and who could not access foreign exchange from the official market, according to a parallel market operator.

The Nigerian treasury bills secondary market closed on a positive note with the average yield across the curve decreasing by 38 bps to 6.71 percent from 7.09 percent on the previous day, a report by FSDH research stated.

The report noted that average yields across short-term and long-term maturities declined by 43 bps each. However, the average yield across the medium-term maturities remained unchanged at 6.33 percent. Bills for April 11, 2024 (NTB 11-Apr-24) (-126 bps) maturity witnessed maximum buying interest.

The CBN held its scheduled Primary Market Auction on May 10, selling NT-Bills worth N143.98 billion across the 91-day (M4.52 billion), 182-day (N5.44 billion), and 364-day (N134.02 billion) tenors. The stop rates for the 91-day, 182-day, and 364-day tenor cleared lower at 4.50 percent (-80 bps), 6.44 percent (-156 bps), and 8.99 percent (-118 bps), respectively.

The auction was heavily oversubscribed by 470 percent, with bid-to-cover ratios settling at 5.13x (91-day), 7.71x (182-day), and 5.64x (364-day).

The Federal Government of Nigeria bonds secondary market closed on a mildly positive note on Thursday, as the average bond yield across the curve cleared lower by 2 bps to close at 14.31 percent from 14.33 percent on the previous day. Average yield across short tenor and medium tenor of the curve declined by 1 basis point and 9 bps, respectively. However, the average yield across the long tenor of the curve closed flat. The March 17, 2027 (17-MAR-2027) maturity bond was the best performer with a decrease in the yield of 21 bps.