BY BAMIDELE FAMOOFO
In the just concluded week at the open market, the local currency skid as it lost N0.02 or 0.3 percent week on week to close at N748/USD from N746/USD in the previous week in the face of currency crunch which continues to bite harder.
Also, at the investors’ and exporters’ FX window, the Naira depreciated slightly by N0.05 or 0.01 percent week on week to close at N461.38/USD from N461.33/USD despite the growing FX demand pressure on the naira.
A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchanged at N462/USD.
Also, in an analysis of the Naira/USD exchange rate in the weekly Naira FX Forward Contracts Markets, it was in the mixed bag across all forward contracts with appreciations reported for Naira at the 1-Month, 2-Month, 3-Month Contracts by +0.13 percent, +0.29 percent and +0.26 percent respectively to close at offer prices of N467.25/USD, N474.37/USD and N483.08/USD week on week.
On the other hand, the dollar gained at the 6-Month and 12-Month contracts against the Naira by +0.14 percent and +0.62 percent week on week to close at contract offer prices of N511.96/USD and N565.28/USD respectively.
In the oil market last week, oil price movement saw a rebound of the commodity to trade at $79.28 per barrel on OPEC not increasing production in the midst of confidence returning to the global banks and higher demand as China’s economic recovery expanded.
However, on the home front, the Bonny Light crude price reacted positively to factors playing in the oil market as it plummeted by 7.6 percent or (USD5.61) week on week, to close at USD79.57 per barrel from USD73.96 barrel last week.
This week, financial analysts expect the naira to trade in a relatively calm band across various market segments barring any market distortion in the face of the naira scarcity and as the Central Bank of Nigeria continues its weekly FX market intervention to defend the value of the naira.
“This week, financial analysts expect the naira to trade in a relatively calm band across various market segments barring any market distortion in the face of the naira scarcity and as the Central Bank of Nigeria continues its weekly FX market intervention to defend the value of the naira”
Similarly, at the money market in the review week, the CBN refinanced N145.46 billion of T-bills that matured via the primary market at higher stop rates for all maturities amid low demand. Specifically, stop rates for 91-day, 182-day, and 364-day bills rose to 6.00 percent (from 2.66%), 8.00 percent (from 5.00%), and 14.74 percent (from 9.49%), respectively.
In tandem with the increase in the 364-day bill rate, yields in the secondary market turned northward for all maturities tracked. NITTY for 1-month, 3-month, 6-month, and 12-month maturities increased to 3.99 percent (from 3.76%), 5.46 percent (from 4.82%), 7.57 percent (from 6.48%), and 12.74 percent (from 9.67%), respectively.
Meanwhile, given the small value of matured OMO bills worth N40 billion, NIBOR rose for most maturities tracked amid the financial liquidity squeeze. Specifically, NIBOR for overnight funding and 6 months rose to 19.00 percent (from 18.88%) and 17.58 percent (from 17.38%), respectively. However, NIBOR for 1 month fell to 16.33 percent (from 16.88%), while NIBOR for 3 months was unchanged at 17.38 percent.
Analysts at Cordros Research said they expect activity in the money market to be bearish amid limited maturing Treasury and OMO bills this week.
