Naira depreciates to N306.9/$ at interbank market

Naira on Tuesday depreciated to N306.90 against the Dollar at the interbank market rate monitored by the Central Bank of Nigeria (CBN).

The Naira at the interbank market rate opened the week at N306.85 against the dollar.

According to finance analysts, the naira continued to depreciate following the high demand as Christmas and New Year demand soar.

At the Investors & Exporters Foreign Exchange window ( I & E FX) the naira against the Dollar weakened by 0.05 per cent to N365.21, while it remained flat at N365 in the parallel market.

Total turnover in the specialized foreign exchange window for investors declined by 15.4per cent to $281.07 million, with trades consummated within the N358.00-366.00/Dollar band.

In the parallel market, the Naira lost 0.21 per cent against the Pounds, while gaining 0.24per cent against the Euro, to close at N466 and N411 respectively. However, it closed flat against the Dollar to close at N365.

“Going forward, we expect the foreign exchange market to continue to see support from CBN’s intervention sales,” analysts at InvestmentOne explained.

At the fixed income and money market, the overnight lending rate surged 2,933 bps to 70.92per cent – highest since May 14 2018 – as the CBN intervened in the market via Open Market Operation (OMO) auction, selling a total of N38.84 billion – N1.01 billion of the 177DTM, and N37.83 billion of the 268DTM bill – at respective stop rates of 13.50per cent and 15.00per cent.

Activities in the treasury bills market were bearish, as average yield rose by eight basis points to close at 15.67per cent. Yields at the short (+7 bps), mid (+five basis points ) and long (+12 basis points) ends of the curve expanded, driven by selloffs of the 16DTM (+75 bps), 100DTM (+26 basis points), and 289DTM (+71 basis points) bills, respectively.

Trading in the bond market was predominantly bullish, with average yield compressing by eight basis points to 15.52per cent. There was demand across the short (-15 basis points), mid (-four basis points), and long (-five basis points ) segments, with the JUN-2019 (-22 basis points), FEB-2028 (-13 basis points) and MAR-2036 (-17 basis points) bonds recording respective contractions