The pressure on the naira is seen by analysts to wane this week, as the Central Bank of Nigeria (CBN) may target N200/$ parallel market rate, looking unto meeting forex demand for the real sector and fiscal policies to complement the current monetary policy measures as tools for achieving it.
Naira on Friday appreciated across market segment, gaining N40 each or 11.59 and 11.43 percent, respectively, at the autonomous and parallel market. It closed at N305/$ compared with N345/$ at the autonomous market and N310/$ on Friday from N350/$ on Thursday, BusinessDay findings revealed.
Meanwhile, the naira strengthened as high as N302 to a dollar on Wednesday, February 24, on the parallel market before reversing the gains and eventually closing at N350/$ the following day. The CBN clearing rate and interbank rate remained stable at N197/$ and N199.10/$, respectively.
The naira last week recovered against the greenback due to the surge in cross-border inflows of the dollar, as market participants sought to take advantage of the arbitrage opportunity that currently exists in the currency space. The naira advanced by 11.39 percent to close at N350/$ (from N395/$) at the Bureau De Change segment, while it appreciated by 11.25 percent at the parallel (or black) market to N350/$ (from N400/$) on Thursday, February 25.
Analysts at Cowry Asset Management Limited expect moderation in interbank rates as the impact of N370.4 billion Federation Account Allocation Committee (FAAC) inflows linger. This is in addition to treasury bills worth N329.93 billion will be auctioned this week via the primary market, viz: 91-day bills worth N57.85 billion; 182-day bills worth N50.00 billion and 364-day bills worth N222.08 billion. Bills of equivalent tenors and values will also mature.
Last week, Nigerian Offered Interbank Rates advanced despite boost in financial system liquidity due to maturities of 301-day treasury bills worth N257.93 billion via Open Market Operations. Overnight, 1 month, 3 months and 6 months NIBOR rose, respectively, to 1.15% (from 1.01%), 7.66% (from 7.04%), 9.07% (from 8.29%) and 10.37% (from 9.54%).
Also, yields on the Nigerian Interbank True Treasury Bills mostly headed northwards on renewed investor sell pressure – yields on the 1 month, 3months, 6 months bills increased to 3.76% (from 3.59%), 3.99% (from 3.73%), 6.70% (from 6.33%), respectively. However, 12 months yield fell to 8.47% (from 9.62%), respectively.
