Naira appreciates further at all foreign exchange markets, windows

The Nigerian currency, Naira, on Wednesday extended its gains at against the three major foreign currencies at all the foreign exchange markets and widows.

The Naira, as at close of trading on Wednesday at the unofficial forex market appreciated further against the US Dollar to close at 363 compared to 364 declared a day earlier and 365 sold during the holiday on Monday.  It, however, recorded significant gains against Pound sterling and Euro to close at 480 and 421, respectively against 485 and 425 sold the previous day at the parallel market.

The local currency, also, appreciated by 0.02 per cent at the official market to close at 305.70 to the dollar, stronger than 305.75 traded on Tuesday and 305.80 traded a week ago.

At the Nigerian Autonomous Foreign Exchange (NAFEX) window, the naira, also opened at a better rate of 359.40 representing an appreciating rate of 0.10 per cent compared to 359.76 on Tuesday and further extends it gains to close at 360.07, stronger than 360.40 exchanged the preceding day but slightly weaker than 360.05 and sold last Wednesday.

Although, the daily turnover at the Importer and Exporters FX window stood at $257.56, as at close of yesterday transaction, which was weaker than $340.07 million traded a day earlier but better than $250.29 million declared in the corresponding period a week ago.

As at close of last week transactions, the autonomous forex window declared a whopping $1.492 billion turnover, with Monday closing figure of $340.07 million, dropped a bit the following day to $299.94 million, Wednesday $250.29 million, Thursday 238.98 million before recording $363.63 million on Friday, which represented the highest turnover during the week.

But were only recorded transactions of $909.59 million, totaling $2.402 billion transactions in the preceding week.

Therefore, financial experts and forex dealers believed that the newly introduced NAFEX widow has reversed the zero level confidence of investors to highest level of confidence in the Nigerian economy.

Meanwhile, the interbank rates including overnight, open buy back and repos may moderate this week as maturing treasury bills worth N130.03 billion hit the system, just as the Central Bank of Nigeria (CBN) plans to sells same value of bills at the primary market auction.

The interbank rate reflects the level of naira cash liquidity in the banking system.

Specifically, CBN will hold a T-Bills Primary Market Auction yesterday where N28.7 billion, N33.5 billion and 68.1 billion of the 91-day, 182-day and 364-day bills respectively would be on offer.

Traders said the auction and sales of treasury bills left some banks short of liquidity, forcing them to scramble for cash to pay for their purchases on the interbank market. But the fact the fact that maturing bills are hitting the system may moderate rates and would not put pressure on banks to borrow.

Analysts also see treasury bills rate moderating on account of the maturing bills and the continued domestic investors’ interest in long dated instruments.

“On the back of continued foreign and domestic investors’ interest in long dated instruments, we anticipate rates to moderate lower towards the end of the week while short to medium term rates remain attractive. We also expect the CBN to sustain its mop-up activity via OMO auctions this week,” said Afrinvest Securities noted in a note to investors and customers.

As at the close of business last Friday overnight rates hover at 14.25 percent while OBB was at 13.67 percent.

Last week, the CBN conducted OMO auctions worth N93.2 billion (vs. N180.0bn offered) on three out of three trading days to mop-up system liquidity. Consequently, T-Bills rates improved 48bps from an average of 15.8% on Monday to close at an average of 16.3% on Friday.