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The naira, this week, is expected to stabilise following anticipated support from the monetary authority, analysts have said.
In a report by Cowry Asset Management Limited, the naira closed steady at the official market after the Central Bank of Nigeria (CBN) offered USD800 million but sold USD767.59 million to end users at its bi-weekly Retail Dutch Auction last week.
Also, the exchange rate last week steadied at the parallel (or ‘black’) market at N172.00/USD. On a positive note, the local currency appreciated against the greenback at inter-bank forex market segment by 0.66% (or N1.09) to N164.51, in line with analysts’ expectations.
The appreciation was on the back of supply from the apex bank as well as sales by a local unit of Chevron to some lenders which amounted to USD42.2 million. However, the naira weakened against the dollar by N0.29 (or N0.50) to N170.50.
This week, there is expected increase in inter-bank rates following anticipated pressure on inter-bank liquidity on the back of foreign exchange (over N100 billion worth) and FGN bond (N90 billion) auctions.
In line with the analysts’ prediction, Nigerian Inter-Bank Offered Rates last week moderated week-on-week for most placement tenors following ease in financial system liquidity.
CBN auctioned treasury bills worth N375.09 billion via primary market and Open Market Operations. The bills consisted of 91-day bills worth N22.97 billion (MR 11.89% from 11.90%); 126-day bills worth N50 billion; 135-day bills worth N50 billion; 182-day bills worth N65.00 billion (MR 13.36% from 13.14%); and 364-day bills worth N187.12 billion (MR 13.51% from 13.19%).
However, matured treasury bills worth N328.30 billion significantly offset the outflows. The maturities consisted of 91-day bills worth N22.97 billion; 97-day bills worth N39.76 billion; 98-day bills worth N16.76 billion; 153-day bills worth N49.34 billion; 155-day bills worth N42.35 billion; 182-day bills worth N40.00 billion; 364-day bills worth N117.12 billion.
In the current week, treasury bills worth N166.48 billion will mature on Thursday, March 13, 2014. The maturities will consist of 101-day bills worth N26.05 billion; 142-day bills worth N97.05 billion; and 147-day bills worth N43.38 billion.
In the out-gone week, the CBN reported that available data from the National Bureau of Statistics (NBS) put Q4 2013 real gross domestic product (GDP) growth at 7.7%, higher than 6.8% in Q3 2013. According to the report, the growth was largely driven by the growth in the non-oil sector as real non-oil GDP grew at 8.7% and accounted for 88.3% of total GDP in the review period while real oil GDP grew by 0.3% and accounted for 11.7% of GDP.
In the review period, industrial activities improved relative to the level in Q3 2013 as the estimated index of industrial production rose to 139.23 (1990=100) from 139.0 and 137.6 in Q3 2013 and Q4 2012, respectively. The increase in industrial activities resulted from increased manufacturing activities as well as increase in electricity generation following repairs on previously vandalised pipelines supplying gas to power plants.
HOPE MOSES-ASHIKE
