The foreign exchange (FX) closed on Tuesday with naira gaining 4.06 percent as dollar liquidity improved at the official market.
After trading on Tuesday, the dollar was quoted at N742.10,
which was stronger than N773.50 quoted on Monday at the Investors and Exporters
(I&E) forex window, Nigeria’s official FX market.
The improvement in the market liquidity indicated the volume
of transactions done by willing buyers and willing sellers on Tuesday.
Consequently, the daily FX market turnover increased by
11.62 percent to $42.26 million on Tuesday from $37.86 million recorded on
Monday, data from the FMDQ showed.
During the FX market auction on Tuesday willing buyers and
willing sellers, which include banks, the Central Bank of Nigeria (CBN)
Exporters and investors maintained bids as high as N807.15, slightly lower than
N804.15 per dollar on Monday and low bid of N738, which was weaker than
N722.39/$1 on Monday.
At the parallel market, also known as black market, naira
remained stable at N930 since Friday.
“Today we still intervene in the market. When you look at
the volumes, the CBN today contributes less than 25 per cent to the FX market.
Years ago, the CBN did not want to be a regular player but more of intervening
to stabilise the rates and that is where we are going,” Folashodun Shonubi,
acting governor of the CBN said.
A report by Commercio Partners noted that the exchange rate
between the Naira and the US dollar experienced significant volatility. The
report said Naira’s depreciation was influenced by a confluence of factors,
including liquidity constraints, imbalanced supply and demand dynamics, and a
critical revelation concerning Nigeria’s FX reserves.
In a significant policy shift, the CBN responded to pressure
from Bureau De Change (BDC) operators by introducing a series of operational
changes aimed at improving the efficiency and transparency of the Nigerian
foreign exchange market.
At the money market, the Nigeria treasury bills (NT-Bills)
secondary market closed on a negative note on Tuesday with the average yield
across the curve increasing by 14 bps to 7.32 percent from 7.18 percent on the
previous day, according to a report by FSDH research.
Average yields across long-term maturities expanded by 32
bps, while the average profit across the medium-term maturities declined by 1
basis point. However, the average work across the short-term maturities
remained unchanged at 4.07 per cent. NTB for the July 11, 2024 (+159 bps)
maturity bill witnessed heavy selling pressure.
The Overnight (O/N) rate increased by 1.97 per cent to close
at 22.80 per cent on Tuesday compared to 20.83 percent on the previous day, and
the Open Repo (OPR) rate increased by 1.89 percent to close at 22.00 percent
compared to 20.11 percent on the last day.