Naira strengthens at Investors window amid weekly forex injection

The Nigerian currency, Naira, at the end of trading activities at the Investors & Exporters Foreign exchange Window (I&E), last week, appreciated against the US Dollar by 0.05 per cent to close at N360.0, amid weekly injections by the Central Bank of Nigeria (CBN).

The apex bank during the week under review lifted the Foreign exchange market with total sum of $210 million, while allocating $100 million to Wholesale (SMIS), while $55 million was allocated to Small and Medium Scale Enterprises and $55 million sold for invisibles.

The Naira, on the last trading of last week began trading at the I&E FX window at N359.83 to the dollar compared to N359.96 recorded a day earlier, however, traded high at N361.50 per dollar before closing at N360.01 against N360.45 sold on Thursday, indicating an appreciable rate of 0.12 per cent.

Although, the Naira at the special FX window, had on Thursday, depreciated by 30 kobo to close at N360.45 per dollar, even as the window recorded transitions turnover of $259.03 million, lower than $572.1 million, which was an upsurge from $170.21 million on traded on Wednesday.

Elsewhere, the Naira against the Dollar rate remained unchanged at the interbank foreign exchange market, the parallel market and the Bureau De Change segments at N330.00/Dollar, N362.00/Dollar and N360/Dollar respectively.

Meanwhile, all dated forward contracts at the interbank over the counter (OTC) segment appreciated–spot rate, 1 month, 2 months, 3 months and 6 months contracts fell by 0.02per cent, 0.07 per cent, 0.13 per cent, 0.23 per cent and 0.40 per cent to close N305.60/Dollar, N363.73/Dollar, N367.62/Dollar, N371.41/Dollar and N385.55/Dollar respectively.

Analysts at Cowry Assets Limited in a report said: “This week, we expect stability in exchange rate amid further accretion to the external reserves as global oil prices retain its upbeat and CBN continues with the weekly intervention.”

Last week, the apex bank auctioned Treasury Bills (T bills) worth N95.20 billion via the primary market; viz: 91- day bills worth N9.52 billion, 182 -day bills worth N17.60 billion and 364-day bills worth N68.08 billion.

Also, T-Bills worth N748.69 billion were sold via Open Market Operations (OMO).

The outflows were partly offset by inflows worth N528.90 billion in matured Tbills. Nevertheless, NIBOR fell for all tenor buckets amid FAAC inflows worth N647 billion: NIBOR for overnight, 1 month, 3 months and 6 months tenor buckets fell week-on-week to 4.56 per cent (from 7.6 per cent), 14.64 per cent (from 14.85 per cent), 15.28 per cent (from 16.01 per cent) and 17.06 per cent (from 17.79per cent) respectively.

Trading in the bond market was bullish, amid the higher liquidity levels, as average yield contracted in all but one session of the week. Week-on-week, average yield dropped seven basis points, to 13.62 per cent.

Demand was strong at the short (-17 bps) and mid (-3 bps) ends of the curve, with the FEB-2020 (-2 8bps) and MAR-2027 (-10 bps) bonds recording significant contractions. Yields at the long segment were flat.

Analysts at Cordros Capital, said: “We expect reduced activity next week due to anticipated squeeze in liquidity position. We however reiterate our expectation for lower yields”.