The Nigerian naira depreciated by 4.58% at the official foreign exchange (FX) market, trading at N904.65 per dollar, despite a 21.10% increase in dollar liquidity. The daily foreign exchange market turnover rose to $120.89 million on Wednesday from $99.09 million the previous day. The Nigerian Treasury Bills (NT-Bills) secondary market closed with a mildly positive note, as the average yield across the curve decreased by one basis point to 11.20%. However, the Overnight (O/N) rate increased to 18.19%, and the Open Repo (OPR) rate rose to 17.19%.
Key Points:
- The Nigerian naira fell by 4.58% at the official foreign exchange market, trading at N904.65 per dollar.
- Despite the depreciation, there was a 21.10% increase in dollar liquidity, with the daily foreign exchange market turnover rising to $120.89 million.
- The willingness of buyers and sellers resulted in dollar quotes ranging from N720.50 to N1,186 at the official market.
- The Nigerian Treasury Bills (NT-Bills) secondary market closed with a mildly positive note, as the average yield across the curve decreased by one basis point to 11.20%.
- Average yields across medium-term and long-term maturities declined by one basis point each, while short-term maturities remained unchanged.
- The Overnight (O/N) rate increased to 18.19%, compared to the previous close of 16.21%, and the Open Repo (OPR) rate rose to 17.19% from 15.71%.
Analysis: The depreciation of the Nigerian naira at the official foreign exchange market, despite an increase in dollar liquidity, indicates ongoing challenges in the country’s foreign exchange management. The fluctuation in the naira’s value reflects the dynamics of supply and demand for foreign currency, and the willingness of buyers and sellers to transact at different rates.
The increased daily foreign exchange market turnover suggests heightened activity in the FX market, potentially influenced by factors such as trade-related transactions, investor activities, or central bank interventions. The wide range of dollar quotes, from N720.50 to N1,186, highlights the volatility and variability in pricing observed in the market.
The positive note in the Nigerian Treasury Bills (NT-Bills) secondary market, with a slight decrease in average yields, may indicate some stability in the fixed-income market. However, the rise in the Overnight (O/N) rate and Open Repo (OPR) rate suggests increased short-term borrowing costs in the money market.
Foreign exchange dynamics, interest rates, and market activities are interconnected aspects of Nigeria’s financial landscape. The central bank’s interventions, policy decisions, and economic conditions play crucial roles in shaping these outcomes. Monitoring these indicators provides insights into the broader economic environment and helps stakeholders, including investors and policymakers, make informed decisions.