The naira on Monday weakened further against the dollar at the Bureau de Change (BDC) segment and the parallel market due to strong demand by end users to meet obligations such as school fees payment and pilgrimage, among others, BusinessDay has learnt.
Consequently, the naira depreciated in value by N1/$ or 0.45 percent each at the BDC segment and the parallel market.
After trading on Monday, it closed at N221/$ compared with N220/$ last week Friday, at the BDC segment and N223/$ as against N222/$ last week Friday, at the parallel market.
Meanwhile, the Central Bank of Nigeria (CBN) last week intervened by selling dollar twice to the BDCs, as the operators expect same volume of supply this week.
BusinessDay gathers that a lot of cash is being moved through the country’s borders to other countries such as Dubai, China and Benin Republic. In addition to this, activities of speculators make worse the weakening state of the naira.
When contacted, Aminu Gwadabe, president, Association of Bureaux De Change Operators of Nigeria (ABCON), said securities agencies should be more proactive and tactful in generating intelligence that would put the situation under control.
“It is having impact on the economy because the rates are going up and it’s making the naira weaker the more. There is no growth, which is not good for the economy. Nigerians should be nationalistic,” he said by phone.
However, the local currency gained by N0.66k/$ or 0.33 percent at the inter-bank foreign exchange market as it closed at N197.62k/$ on Monday, from N198.28k/$ last the week Friday, according to data from FMDQ.
On the other hand, money market rates seemingly reflected the improved system liquidity in the financial system, analysts at Meristem Securities limited have said. The Open-Buy-Back (OBB) and Overnight (OVN) rates recorded respective declines of 0.09 percent and 0.08 percent to peg the average rate at 8.46 percent, as recorded in the prior trading day.
In the inter-bank space, save for the CALL rate that declined by 0.42 percent, rates climbed across the 1M (+0.24%), 3M (+0.26%) and 6M (0.25%) tenors, thereby pushing the average Inter-bank rate up by 8bps to 14.93 percent.
Investors’ appetite for T-bills instruments skewed towards the short and mid-term instruments, given that save for the 9M and 12M tenors that recorded yield increases of +0.10 percent (15.79%) and +0.12 percent (16.27%), yields for all other tenors trended southwards.
Contrarily, demand for the longer term fixed income instruments was more skewed towards the longer termed instruments, with the MAY-2029 (-0.08%), NOV-2029 (-0.10%) and JUL-2030 (-0.12%) all recording declines in yields. Contrarily, the largest decline in yield was recorded on the APR-2017 (-0.26%) bond, which recorded the most attractive offer yield across all benchmark on-the-run bonds.
