…Stables at N306.95 /$ at CBN official rate
The Nigerian currency, naira rebounded from the speculated rate of over N400 per United State Dollar traded during last week to close at an improved rate of N380 to the dollar at the parallel market.
Although, the local currency still remained under pressure as it weakens by 5.3per cent to N380.00/USD also dropped by 0.6per cent in one week 368.47 against the dollar at the Investors & Exporters (I&E) Foreign Exchange window.
The local currency also lost 0.48per cent against the Euro to close at N416 but remained flat against Pounds to close at N490.
As foreign outflows intensify, the country’s foreign exchange reserves declined by $61.70 million in its week-till-date (WtD) performance to $36.16 billion (March 12, 2020), as the CBN maintained its support for the currency via its weekly FX interventions; $210.00 million was sold across the different segments of the FX market – $100.00 million to the Wholesale segment, $55.00 million to the SMEs segment, and $55.00 million to the Invisibles segment.
“Looking ahead, we expect the foreign reserves to support the CBN’s currency defence over H1-20. Further out, the blend of tighter cash inflows, faster pace of capital repatriation and the possible resurgence of speculative attacks on the naira will force the CBN to throw in the towel in our opinion,” analysts at Cordos capital said.
Activities in the treasury bills market were bearish as foreign investors sold off Open Market Operation (OMO) bills on coronavirus fears and the crash in oil prices.
Consequently, the average yield across instruments expanded by 242basis points to 12.6 per cent.
The average yield in the OMO segment of the market expanded by 370basis points to 16.6 per cent while the average yield in the NTB secondary market contracted by 13bps to close at 3.9 per cent.
Last week’s NTB the ary auction, the CBN fully allotted N86.30 billion worth of bills – N1.80 billion of the 91-day, N14.00 billion of the 182-day and N70.50 billion of the 364-day – at lower stop rates of 2.49per cent (previously three per cent), 3.78per cent (previously four per cent), and 5.30per cent (previously 5.70per cent). “We expect foreign investor led-selloffs to persist in the OMO secondary market amidst continued Coronavirus worries and lower oil prices. At the NTB PMA next week, the CBN is expected to offer NGN47.56 billion worth of instruments to investors,” analysts at Cordros capital added.