Naira rebounds to close at 367/$1 at parallel market

After trading for only three days during last week, due to two days declared as public holiday by the Federal Government, the Nigerian currency, Naira, on Friday, rebounded to close at 367 to a US dollar against 369 sold on Thursday, at the parallel market.

The naira had traded on the first trading day of the week, Wednesday, at 368, but depreciated slightly to 369 and 370 per dollar in some unofficial forex markets in Lagos and other major cities across the country.

The local currency against the Euro and Pound sterling were sold at 410 and 465, respectively, the same rates it has been selling at the parallel market in the recent time.

At the official interbank market, the naira was retained at 305.90 per dollar, the same rate it exchanged on Thursday but against 305.85 closed the previous week.

But at the Investors & Exporters Foreign Exchange (I&E FX) window, the Nigerian currency, appreciated to 366.44 compare to 368.67 sold earlier in the week, but lower than 362.16 exchanged the previous Friday.

The local naira currency came close to converging at the investor foreign exchange window and black market last week, with analysts attributing the development to increased dollar liquidity in the foreign exchange market.

Meanwhile, the Central Bank of Nigeria (CBN) sold N31.94 billion ($104.76 million) in treasury bills on Friday in a bid to tighten liquidity in the money market while overnight lending rate fell.

Therefore, foreign exchange dealers said the total sum of N31.52 billion of 349-day Treasury bill at 18.59 per cent and N440 million of 160-day Treasury bill at 17.98 per cent was auction on Friday.

However, cost of borrowing among commercial banks dropped to around five per cent on the interbank market from around 8.5 per cent last week.

But the cash balance in commercial lenders’ accounts with the apex bank stood at 320.35 billion naira on Friday, boosted by the repayment of around 287.39 billion naira in matured treasury bills on Thursday.

“Interbank rate is at low level because the central bank sold fewer dollars this week (on the currency market),” one currency trader said.

Traders expect rates to remain flat next week unless the CBN decides to take advantage of the low rates to mop-up excess liquidity from the banking system.