• Friday, March 01, 2024
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Naira rebounds with 5.32% gain as demand moderates at official FX market

Naira strengthens as CBN moves to stabilize economy

Naira, demonstrated resilience by rebounding after a two-day loss, driven by a moderation in demand observed on Tuesday at the official foreign exchange (FX) market, despite facing challenges associated with low dollar liquidity.

Following the day’s trading activities, data from the FMDQ revealed that the naira experienced a notable 5.32 percent recovery against the US dollar.

The dollar was quoted at N878.61, showcasing a significant improvement from the N925.34 recorded on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

During spot trading, willing buyers and willing sellers participated actively, presenting a high bid rate of N1,336.05 and a low bid rate of N701 for the US dollar.

This shift in dynamics suggests a more balanced exchange scenario, contributing to the Naira’s positive performance in the market.

The FX market grappled with low dollar liquidity over the past two trading days, presenting challenges for market participants.

The daily turnover in the foreign exchange market experienced a significant 20.28 percent decline, falling to $58.46 million on Tuesday compared to the $73.33 million recorded on Monday.

This downturn in market activity underscores the current strain on dollar availability, impacting trading dynamics. Analysts are closely monitoring these trends, seeking insights into the factors contributing to the reduced liquidity and its potential implications for the broader financial landscape.

The market awaits further developments as stakeholders navigate the evolving conditions in the FX arena.

In a strategic move at the money market, the Central Bank of Nigeria (CBN) is set to conduct a Primary Market Auction (PMA) on Wednesday to roll over Nigerian Treasury Bills (NT-bills) maturities totaling N231.82 billion.

This comprehensive auction will encompass varying tenors, including N7.85 billion for the 91-day, N6.44 billion for the 182-day, and a significant N217.53 billion for the 364-day tenors.

The CBN’s decision to roll over these maturities underscores its commitment to managing liquidity and ensuring stability within the financial system.

Analysts are keenly observing this PMA as it unfolds, anticipating its impact on the money market and gauging market participants’ responses to the varying tenors on offer.

The outcome of the auction will provide valuable insights into current market sentiments and the CBN’s efforts to navigate the intricacies of monetary policy.