• Wednesday, February 21, 2024
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BusinessDay

Naira strengthens by 23.72% as demand moderates at official market

Nigeria’s Naira strengthened by 23.72 percent as demand for dollars moderated at the official foreign Exchange (FX) market on Thursday.

This is despite a drop in the volume of dollar supply in the FX market by 54.48 percent.

After trading on Thursday the dollar was quoted at N874.79 as against N1,082.32 quoted on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ indicated.

Willing buyers and sellers quoted the dollar at N1,264.96, representing the highest bid rate, and at N475/$, marking the lowest spot rate.

The daily FX market turnover declined by 54.48 percent to $110.41 million on Thursday from $242.60 million recorded on Wednesday.

In a positive turn of events, the Nigerian Treasury Bills (NT-Bills) secondary market closed with a notable decrease in average yields, signaling increased investor confidence.

A report from the FSDH research said the average yield across the curve dropped by 82 basis points (bps) to 3.28 percent, down from the previous day’s 4.10 percent.

This shift was particularly evident in short-term, medium-term, and long-term maturities, with declines of 27 bps, 93 bps, and 109 bps, respectively.

Notably, the NTB for July 11, 2024 maturity bill experienced significant buying interest, witnessing a decline of 142 bps.

On January 10, the Central Bank of Nigeria (CBN) conducted its scheduled Primary Market Auction, where NT-Bills worth N149.40 billion were successfully sold across different tenors. The allocation included N2.78 billion for the 91-day, N94.33 billion for the 182-day, and N52.29 billion for the 364-day tenors.

The auction results revealed a substantial decrease in stop rates for all tenors. The rates cleared at 2.4400 percent (-456 bps) for the 91-day, 4.2200 percent (-578 bps) for the 182-day, and 8.3990 percent (-384 bps) for the 364-day tenor. The remarkable success of the auction was underscored by overwhelming investor participation, with bid-to-cover ratios settling at 13.99x (91-day), 26.10x (182-day), and an astounding 191.37x (364-day). The auction’s oversubscription reached an impressive 17,731 percent.

The positive performance in the NT-Bills secondary market, coupled with the success of the CBN’s primary market auction, reflects a robust investor appetite and confidence in Nigeria’s short-term debt instruments. This development may have broader implications for the country’s economic outlook and financial stability.