By Francis Ogwo
The liquidity of Nigeria’s foreign exchange rose on Wednesday with the daily forex turnover climaxing to a record high of $227.29 million since almost eight weeks at the Investors and Exporters (I&E) FX window.
According to data from FMDQ, this record represents 1,132.6 percent increase as compared with $18.44 million recorded on Tuesday
There was an unchanged closing rate, as FX traders remain tight-lipped on the source of the inflow.
Analysts at Zedcrest disclosed that the Naira however lost marginally at N0.02k as the market closed with the dollar standing at N386.00k on Wednesday as against to Tuesday’s record.
“We expect to see some respite from pressure on the naira as the funds flow into the market,” Zedcrest said.
According to reports, the Central Bank of Nigeria (CBN) is planning to resume FX supply to BDCs (Bureau de Change) as international flights are expected to restart from August 29. The I&E FX Window has been experiencing currency shortages as FX sales to the BDC segment remain suspended, said analysts at FSDH Research.
On the black market and retail bureau, Naira was stable at N476 per dollar. It was stable at N381/$ on the official spot by the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window.
A report by FSDH Research stated that most participants maintained bids between N380.00 and N387.34 per dollar.
“We anticipate a surge in dollar demand, putting further pressure on the naira, which has already been adjusted twice this year,” analysts at FSDH Research said.
At the money market, the interbank system liquidity improved by about 26.24 percent to open at about N91.45bn on Wednesday’s session as banks received some refunds from failed retail FX bids, a report by Zedcrest noted.
Consequently, the Open Buy-back (OBB) and Overnight (OVN) rates dropped again by about 240bps to close at 13.00 percent and 13.35 percent, respectively, as funding pressures gradually ease off local banks.
“We expect rates to drop even further during Thursday’s session as Open Market Operation (OMO) maturities hit the system. There remains an outside chance of an OMO auction floated by the CBN, but we don’t expect this to heavily influence rates as issued volumes remain small and targeted to foreign portfolio investors,” analysts at Zedcrest said.
There was improvement in activities in the OMO bills space on Wednesday with local banks resuming purchasing mid-to-long-dated papers in anticipation of OMO maturities of about N181bn expected today (Thursday). The January to March bills saw the most love, trading around mid-3 percent levels all day.
“We also saw some offers at the long-end (June and August bills) but not much interest seen below 4.00 percent,” analysts at Zedcrest said.
The Nigerian treasury bills made no movements Wednesday as offers at the end of the curve (July bill) at 2.90 percent levels were still met with no demand.
