Naira at I & E FX window depreciates by 0.06% to close at N411.50
By Kayode Tokede
Naira at Investors & Exporters Foreign Exchange window ( I & E FX) market on Monday depreciated by 0.06 per cent to close at N411.50 against the Dollar.
Also at the I & E FX window, the Naira gained by 0.07per cent and 0.18 per cent against the Euro and Pound sterling closing at N483.26 and N569.48 respectively.
At the parallel market, while the Naira closed flat against the dollar and GBP at N510 and N705 respectively, it appreciated by 0.33per cent against the Euro at N596.
Last week, the local currency at I & E FX window in its week-on-week (WoW) performance depreciated by 0.01 per cent to close at N411.5 against the dollar from N411.4 4 it opened for trading last week.
Despite the supply of foreign exchange sales to Bureau De Change (BDCs), the local currency strengthened against the dollar at the BDC and parallel markets by 0.98per cent and 1.35per cent to close at N505 and N510 against the dollar respectively.
Analysts at Cowry Asset noted that the speedy appreciation of the local currency against the foreign exchange – which earlier touched N525 against the Dollar after Central Bank of Nigeria (CBN)’s announcement – may have been caused by the expectation of foreign currency inflows from Eurobond issuance of $6.2 billion and the anticipated $3.4 billion SDRs (Special Drawing Rights) from International Monetary Fund (IMF).
Naira at the CBN window last week traded flat at N409.11 against the dollar at Buying rate and N410.11 against the Dollar at Selling rate.
On the flip side, the Naira at the CBN window appreciated by 0.33 per cent to N569.52 against the pound sterling at buying rate in WoW performance from N571.39 against the Pound sterling in prior week’s trading, and also gained 0.69 per cent to N483.04 against the euro at buying rate prior’s week exchange rate transaction.
As gathered, the apex bank injected $210 million into the foreign exchange market with a breakdown of $100 million allocated to Wholesale Secondary Market Intervention Sales (SMIS), $55 million was allocated to Small and Medium Scale Enterprises and $55 million was sold for invisibles.
Despite the CBN intervention, the foreign reserves increased to $33.57billion as at August 5, 2021 from $33.40billion it closed in June.
Analysts at Cowry assets noted that, “In the new week, on the back of the anticipated Dollar inflow and recent accretion to the external reserves – foreign exchange reserves rose w-o-w by 0.48per cent to close at $33.5 billion –, we expect Naira to further strengthen against the greenback at most foreign reserves segments, especially at the parallel market.”
Also, analysts at Cordros Research said, “We expect improved liquidity in the I& F FX window over the medium term, given our expectation of (1) increased oil inflows in line with the rise in crude oil prices, and (2) inflows from FCY borrowings ($6.20 billion) and IMF SDR ($3.40 billion).
“Accordingly, we expect the Naira to remain relatively range-bound (N410.00 against the Dollar – NGN415 against the Dollar) at the I & E FX window.”
The values of FGN Bonds increased as traders’ bids were filled at lower yields for most of the maturities tracked.
Trading in the Treasury bonds secondary market sustained its bullish run as the average yield contracted by 13basis points to 11.9per cent.
However, on Monday, money market rates decreased today as both Open Buy Back and Overnight rates fell by 700basis points and 675basis points to 13.00 per cent and 13.75 per cent respectively.
In the bond market, we saw the market trade slightly positive as yields declined on some maturities. The yields on the 5year and 10year benchmark bonds close flat at 11.70 per cent and 12.41 per cent respectively, while the yield on the 7year benchmark bond traded down by 16bps to close at 12.20 per cent.
In the near term, we expect market activity to be influenced by liquidity levels and foreign investor participation.
