Market News

Interventions in the foreign exchange market by the Central Bank of Nigeria (CBN) on Monday and yesterday resulted in a significant appreciation of the naira against the dollar on the official market, according to a Bloomberg report yesterday.

Data posted on FMDQ’s website shows that the naira strengthened to N1,339.33/ per dollar on Monday and yesterday, compared to N1,482.81/$1 last Friday.

The report quoted Olaolu Boboye, an analyst at asset manager CardinalStone in Lagos as having said: “The central bank dollar sales and OMO auction” helped to strengthen the naira.

According to the report: “Dollar liquidity had surged on Friday as the CBN’s sale of one-year paper attracted flows. The sale of N1.143 trillion ($800 million) worth of bills at a 22.49 per cent yield, more than doubled liquidity in the foreign exchange market to $556 million.

“However, that liquidity surge was not sustained into Monday, when the volume of dollars sold in the market declined to $181 million despite the central bank intervention.”

The news agency reported Samir Gadio, head of Africa strategy at Standard Chartered Bank, as saying that the central bank was selling hard currency in the range of N1,260 to N1,320 per dollar, well off the current exchange rate below N1,400/$1.

The sales are taking place ahead of today’s maturity of a $1.3 billion futures contract, he noted. “The rationale may be to contain and pre-empt a potential increase in dollar demand in the coming days,” Gadio said. It is also “conceivable” that there could be another bill sale to offset the impact of the expiring contract, he said.