Naira and Dollar notes
The naira fell against the United States dollar at both the Wholesale Dutch Auction System (WDAS) and the interbank segments of the forex market yesterday due to high demand for the greenback.
Dealers attributed the development to demand for the dollar by importers who were rushing to bring in goods ahead of the yuletide season.
Consequently, at the interbank, the naira slipped by 15 kobo to close at N157.60 to a dollar yesterday, from the N157.45 to a dollar on Tuesday.
However, the local currency dipped marginally at the WDAS as it fell to N155.77 to a dollar Wednesday, compared to the N155.76 to a dollar it closed on Monday. This was due to the strong intervention by the Central Bank of Nigeria (CBN). The apex bank raised its supply of the greenback at the bi-weekly auction by 125 per cent as it sold a total of $180 million to the 17 banks that participated in the auction yesterday, as against the $80 million offered on Monday.
But the naira was stable at the parallel market as it maintained its value of N159 to a dollar, according to data made available by the Financial Market Dealers Association (FMDA).
The naira had weakened against the dollar by 0.2 per cent at the Interbank (3 per cent year-to-date) on Tuesday, largely due to dollar outflows to cover import bills and other sundries expenses. The local currency closed on Tuesday at N157.5/$1
A joint report by Kunle Ezun and Kenneth Asenime of the Ecobank Group said: “The CBN’s liquidity management efforts remain active, which is partly explained by the earlier but ongoing effects of the CBN indirectly tightening banks’ access to dollar in late July and early August.
“Nonetheless, the naira outlook appears more certain over the short term given increased reserves, the recent affirmation by Fitch of the BB- rating and the Monetary Policy Committee’s decision to leave the Monetary Policy Rate unchanged at 12 per cent on 20 November. The naira is likely to remain under pressure with an ongoing weakening bias due to structural imbalance between dollar supply and demand.”
The liquidity management office sold N105.4 billion of 122-day and 101-day Open OMO bills on Monday. It offered N100 billion and sold N76.9 billion of 122-day at 13.49 per cent stop rate. It sold N28.4 billion of 101-day at 13.4 per cent stop rate. Similarly, the CBN had sold N177.61 billion of 91-day,182-day and 364-day bills on 5 December 2012 on competitive and non-competitive basis.