The Nigerian currency on Tuesday strengthened slightly against the US dollar across foreign exchange markets.
At the Bureau De Change (BDC) segment and the black market, the naira settled at N378 per dollar at the end of the trading on Tuesday from N380/$ traded in the morning.
At the Investors and Exporters (I&E) forex window, it was quoted at N367.57kobo to the dollar, gaining 0.06 percent from N367.78kobo traded the previous day.
Earlier in the day, dollar traded at between N378 and N380 in Lagos black markets. At Broad street and Festac areas of Lagos dollar traded at N380 while in Apapa it sold at N378 per dollar.
“Dollar will not go down again”, one of the black market operators at Broad Street told BusinessDay on Tuesday.
The local currency weakened by 0.02 percent to close at N307.00kobo per dollar from N306.95kobo/$ quoted at the official window.
The foreign exchange daily turnover decreased by 51.51 percent to close at $143.33 million compared with $295.58 million recorded the previous day, according to the data obtained from FMDQ.
At the Primary Market Auction (PMA), the Central Bank of Nigeria (CBN) is expected to roll over Treasury bills worth N47.6 billion today (Wednesday).
The system liquidity is expected to be boosted by inflows from Open Market Operation (OMO) maturities worth N304.8 billion. “We expect the CBN to conduct an auction to mop up excess liquidity,” analysts at Afrinvest Securities Limited said.
The analysts anticipate improved demand given the level of system liquidity at about N692.0 billion as at Friday as well as limited alternative options.
“We advise investors to trade cautiously while taking advantage of attractive opportunities along the yield curve, as well as expected Commercial Paper offers,” the analysts said.
However, NT-bills market ended the trading session on a flat note on Tuesday, with average yields remaining unchanged at 3.82 percent, while the average OMO yields increased by 4 bps to 16.99 percent according to a report by FSDH research.
The overnight rate declined by 5.46 percent to close at 12.64 percent as against 18.10 percent. Also the Open Buy Back (OBB) rate declined by 5.69 percent to close at 11.71 percent from 17.40 percent on the previous day.
“We expect the money market rates to remain under pressure, as the system liquidity remains tight due to NT-bills auction scheduled tomorrow,” analysts at FSDH research said.
Last week, the Nigerian Treasury Bills (“NT-Bills”) market started off with panic sell-offs across the yield curve as investors reacted to the slump in oil prices amidst the global outbreak of COVID-19. Sell-offs persisted into the third trading session, albeit less aggressive, with investors trading cautiously ahead of the Primary Market Auction (“PMA”). However, on Thursday, pockets of unfilled bids filtered into the market owing to improved system liquidity from OMO maturities (N223.7bn) coupled with no OMO auction sales by the CBN. Most of the demand were skewed to medium term maturities, particularly the 12-Nov-20 (-81bps), 29-Oct-20(-63bps) and 15-Oct-20(-63bps) instruments. As a result, average yield across tenors dropped marginally to 3.9% from 4.0% the previous week.