The naira improved slightly at both the interbank and Wholesale Dutch Auction System (WDAS) segments of the forex market yesterday due to low demand for the greenback.
Data from the Financial Market Dealers Association (FMDA) showed that at the interbank, the local currency climbed by 12 kobo to close at N158 to a dollar Wednesday, compared with the N158.12 to a dollar it was last Friday.
On the other hand, at the bi-weekly auction, the apex bank offered a total of $120 million at N155.80 to a dollar compared with the $200 million it sold at the last auction.
The money market did not open on Monday and Tuesday because of the public holiday declared in celebration of the 2012 Eid-el-fitri.
Dealers however attributed the development to inflow of funds into the system from investors in the Nigerian fixed income securities market.
The Central Bank of Nigeria (CBN) yesterday sold N71 billion worth of treasury bills, with maturities ranging from 91and 182 days. A breakdown of the Primary Market Auction (PMA) showed that for the 91-day bill, a total of N30.65 billion was auctioned by the regulator while for the 182-day bills, a total of N40 billion was also auctioned.
Analysts at FSDH Securities Limited argued: “The managed float strategy of the CBN should keep forex rate stable,” going forward.
Commenting on the 12.8 per cent inflation rate recorded in July, FSDH explained in its latest weekly report: “Inflation rate will remain in double-digits throughout the year 2012 as a result of the partial removal of the fuel subsidy in January 2012 which led to high current prices.
“Therefore, the appropriate measure to gauge the inflationary pressure in the economy under the current situation, for policy decision making purposes, is the month-on- month inflation change. We are of the opinion that monetary policy measures cannot bring down the inflation rate to single-digit as the cause is structural in nature.”
Meanwhile, the FMDA revealed that trading on 16 per cent FGN Bond June 2019 (9th FGN Bond 2019 Series 3) commenced Wednesday.
The association in a note to dealers said: “With reference to the monthly FGN bond auction held on Wednesday, 15 August 2012 and subsequent settlement on Friday, 17 August, 2012, the 16 per cent FGN BOND June 2019 (9th FGN Bond 2019 Series 3) is currently N80 billion in issue.”