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Monday, 23 September 2013
Naira to stabilise this week on increased foreign portfolio investment
The naira, this week, is expected to stabilise on the back of increase in Nigeria’s crude oil output and the likely increase in foreign portfolio investment inflows occasioned by the decision by the U.S. Federal Reserves not to taper the monthly $85 billion quantitative easing, analysts at Cowry Asset Management Limited have said.
At the close of Friday foreign exchange trading, the naira strengthened against the US dollar gaining 11 kobo at the inter-bank market to close at N161.20/$ compared to N161.31/$ the previous day, data from the Financial Markets Dealers Association (FMDA) have revealed.
The naira appreciated due to increased forex supply by NNPC and some oil companies, Sewa Wusu, head of research, Sterling Capital Markets Limited, told BusinessDay in an e-mail response.
He said on Thursday that Nigerian National Petroleum Corporation (NNPC) sold about $500 million, which has provided reduced pressure on the naira.
According to the analysts, naira faired positively in most market segments in the just concluded week amid restoration of licenses to a number of bureau de change operators.
The local currency gained grounds against the greenback at the inter-bank market, bureau de change and parallel market by 1.26% (or N2.06), 1.22% (or N2.00) and 1.21% (or N2.00) to close at N161.10, N162.50 and N163.00/USD, respectively. However, at the official market, naira exchange rate traded flat to close at N155.76/USD after Central Bank of Nigeria (CBN) offered and sold $600 million to authorised dealers at its bi-weekly Wholesale Dutch Auction.
Compared against other major currencies, the naira depreciated against the British pound sterling and Euros by 1.05% (or N2.59) and 1.47% (or N3.05) to close at N249.59 and N210.48, respectively.
At the money market this week, the CBN will auction treasury bills worth N124.70 billion, viz: 91-day bills worth N31.84 billion; 182-daybills worth N33.78 billion; and 364-day bills worth N59.08 billion via PMA. However, treasury bills totaling N225.52 billion will mature on Thursday, September 26.
These bills will consist of 91-day bills worth N31.84 billion; 182-day bills worth N59.08 billion; 183-day bills worth N100.82 billion; and 364-day bills worth N33.78 billion via PMA and OMO. “Consequent upon the inflows and anticipated injection of FAAC funds, we expect interest rates to mellow across all tenor buckets”, the analysts said.
In the just concluded week, money market rates spiked at the beginning of the week on the threat that the CBN was to debit the banks with 2012 AMCON sinking fund contributions, which is based on 0.5% of each banks’ year-end total assets. This was exacerbated by CBN auction of $600 million (about N98.40 billion) and treasury bills worth N53.54 billion, viz: 91-day bills worth N20.28 billion; and 182-day bills worth N33.27 billion via PMA. However, calm returned to the market as treasury bills valued at N156.53 billion were redeemed on Thursday, September 19.