Foreign reserves drop by $106.2m to $34.25bn — CBN
By Kayode Tokede
The Central Bank of Nigeria (CBN) has said the foreign exchange dropped by $106.2million to $34.25billion as at May 27,2021 from $34.35billion reported May 20, 2021.
The nation’s foreign exchange buffer in May has been on a decline, following the apex bank sustained intervention.
However, the local currency was flat at N412.00 against the Dollar at the Investors & Exporters Foreign Exchange (I &E FX) window but depreciated by two per cent to N495 against the Dollar at the parallel market.
At the IEW, total turnover (as of 27th May 2021) increased by 126.7per cent WTD to $1.16 billion, with trades consummated within the N400.00 – 420.25 against the Dollar band.
“We expect improved liquidity in the I & FX window over the medium term, given the higher oil prices and an expected increase in crude oil production volume.
“Accordingly, we expect the naira to remain relatively range-bound (N410.00/Dollar – N415.00 against the Dollar) at the I & E FX window.”
However, the overnight (OVN) rate expanded by 217 basis points, week-on-week (w/w) to 19.2per cent, as funding pressures for CRR debits,
NTB net issuances (N87.95 billion) and CBN’s weekly OMO (N41.00 billion), and FX auctions offset inflows from FAAC disbursements (c. N390.00 billion), OMO maturities (N110 billion), FGN bond coupon payments (N14.91 billion) and FX retail refunds.
As in prior weeks, the depressed system liquidity underpinned another bearish performance in the Treasury bills secondary market as local banks continued to sell-off positions to fund their liquidity obligations. Thus, the average yield across all instruments expanded by 31basis points to 8 per cent.
Across the market segments, average yield closed higher by 36basis points to 9.6per cent at the OMO secondary market and by 34basis points to 6.1per cent at the NTB segment.
“At this week’s OMO auction, the CBN sold NGN41.00 billion worth of bills to market participants and maintained stop rates across the three tenors, as with previous auctions.
Bearish sentiments persisted in the Treasury bonds secondary market following liquidity constraints and investors’ expectations of higher yields across the Naira curve.
Consequently, the average yield in the space expanded by 8 per cent to 12.5per cent. Across the curve, average yield declined at the mid (-7basis points) segment, driven by an improvement in bids for instruments at the segment.
