Naira, Nigeria’s legal tender has traded unchanged with the United States dollar at N416.50 consecutively in the last two days at the official market, due to forces of demand and supply as dollar scarcity hits the foreign exchange market, traders said on Wednesday.
Data obtained from the FMDQ show that the market opened on Tuesday with the dollar trading at N416.04/$, representing 0.04 percent gain compared with N416.19 opened on Monday.
Foreign exchange dealers maintained bids at N444/$ high and N410 low at the Investors and Exporters (I&E) forex window.
“The Foreign Exchange (FX) market is highly regulated hence the limited fluctuations since the year began, the rates have been around N416/$ handle since January,” Marvellous Adiele, Analyst at Parthian Partners, Africa’s premier inter-dealer broker, said on Wednesday.
A banker who spoke with BusinessDay on Wednesday said, “there is no time there has not been scarcity of dollar and there is no time demand has not outstripped supply.”
At the money market, the Treasury bill market traded with mixed sentiment yesterday; short and mid tenor papers were in demand, while the longer dated papers were being offered around (notably the 9-Mar paper at 4.00%). A bearish bias prevailed as long end papers were the most traded, a report by Parthian Partners noted.
“We expect a calm session today, as participants await the outcome of the NTB auction where N58bn is on offer across the three standard tenors,” analysts at Parthian Partners said.
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The Open Repo (OPR) and Overnight (O/N) rates remained stable as there was no funding pressure on the robust system liquidity.
“We expect rates to remain within current levels, pending a liquidity event in the interbank market,” the analysts said.
Demand persisted on the shorter end of the bond curve in yesterday’s session. Interest was notable on the 2026s – 2028s papers, as well as the 2023 maturity as an alternative to the 1-year NTB paper.
“We expect to see a similar trend in today’s session,” the analysts said.
In the FX spot and derivatives markets, the total turnover for the week-ended March 4, 2022, was $697.54 million, representing an increase of 20.06 percent ($116.55 million) from $580.99 million reported for the week-ended March 4, 2022, a note from the FMDQ group said.
The week-on-week (WoW) increase in total turnover was driven by the 32.84 percent ($150.06 million) increase in FX Spot turnover, despite the 27.03 percent ($33.51million) decrease in FX Derivatives turnover.
The WoW decrease in FX derivatives turnover was driven by the 1.35 percent ($1.24 million) and 100.00 percent ($32.27 million) decreases in FX Forwards and FX Futures turnovers, as there was no activity in the FX Futures market.
In the FX Spot market, the total value of transactions for the week-ended March 11, 2022, was $607.07 million, representing an increase of 32.84 percent ($150.06 million) from the value of transactions executed in the week-ended March 4, 2022 ($457.01 million).