The nation’s currency which traded stable last week is expected to continue this week following improved liquidity in the foreign exchange market.
More so, the Central Bank of Nigeria (CBN) will be settling US$270.6m in open futures contracts maturing 26th October 2016 and to open a new October 2017 futures contract with a total value of $1.0bn to replace the maturing instrument.
Last week, the central bank sold around $313 million to clear a backlog of dollar demand from airlines, manufacturing and other firms.
The naira remained stable at the interbank market last week as it firmed 1.2 percent Week-on-Week, strengthening to N304.75/US$1.00 on Friday from N307.77/US$1.00 in the previous week. Nonetheless, persistent interventions by the CBN with dollar sales at the interbank segment as well as tight foreign inflows continues to pressure the external reserves as it currently sits at US$23.9 billion from US$26.4 billion as at first half of 2016.
At the parallel market, the Naira/Dollar exchange rate remained stable at N455.00/US$1.00 on all trading days of last week save for Tuesday when it appreciated to N453.00/US$1.00 as Travelex continues to provide an alternative source of dollar supply for travelers and licensed Bureau-De-Change operators.
Analysts at Afrinvest Securities limited believe rate at the parallel market will be pressured in the weeks ahead on the back of the Apex Bank’s decision to maintain status-quo on the suspension of 19 banks from dollar sale to BDCs, suspension of Naira debit cards for FX transactions and Travelex’s inability to meet the rising foreign currency demand from BDC operators.
But analysts at the Cowry Asset Management limited anticipated stability in the alternative markets on anticipatedreduction in demand pressure following the satisfaction of a significant number of areas through the forward sales.
Both analysts anticipate further moderation in interbank interest rates following treasury bills maturity worth N144.958 billion via secondary market, viz: 101-day bills worth N73 billion, 205-day bills worth N40.2324 billion, and 206-day bills worth N31.634 billion.
Meanwhile, Federation Account Allocation Committee (FAAC) disbursed N420 billion for the month of October (a N90.27billion month-on-month decline from N510.27 billion distributed in September) on Thursday, 20 October.
Last week, treasury bills worth N138.173 billion were auctioned via primary market, viz: 91-day bills worth N36.787 billion (Stop Rate, SR, rose to 14% from 13.9%) 182-day bills worth N35 billion (SR remained at 17.09%), and 364-day bills worth N66.386 billion (SR rose to 18.3% from 18.25%). The outflows were offset by matured treasury bills of equivalent tenors and amounts. Despite the neutral netflow, the return of funds to the banks for unsuccessful Forex forward bids led to NIBOR for overnight funds crashing to 16.23% (from 70.17%). However, 1 month, 3 months and 6 months Funds increased w-o-w to 19.82% (from 19.29%), 20.27% (from 20.07%) and 23.04% (from 22.14%). Meanwhile, FAAC disbursed N420 billion for the month of October (a N90.27billion month-on-month decline from N510.27 billion distributed in September) on Thursday, 20 October.
