Naira Records Gain, BDCs Sell US Dollar at N1,050
The naira recorded another gain against the US dollar in the forex market on Monday. However, the exchange rate recovery appeared to have slowed down, having lasted for weeks across foreign exchange markets, according to the latest data obtained by Daily Global News.
So far, the naira gain streaks has been sustained. The exchange rate appreciated to N1136 per greenback at the Nigerian autonomous forex market amidst expectations that the Central Bank would pump additional US dollars into the forex markets. Most of the Broadtsreet currency analysts have turned to naira bulls.
Goldman Sachs revised its fair value projection on the local currency exchange rate versus the US dollar to N1000. The global investment firm had predicted N1,200 exchange rate over 12 months.
The monetary authority has maintained its position that the naira is grossly undervalued. The Financial Derivative Company sees the exchange rate at N910.10 due to improved market conditions.
FX market confidence has been boosted strongly following signals that the apex bank under Yemi Cardoso has resolved to use policy re-direction to remove bottlenecks created in the forex market by the previous administration. Due to the success recorded so far over the ongoing FX reform, there has been an increase in US dollar inflows into the company following an attractive interest offering on Treasury and OMO bill sales.
Daily Global News reported that the Central Bank (CBN) trimmed the interest rate on Treasury bills on Friday following an increase in demand for naira assets. At the primary market auction on Friday, the CBN recorded N1.82 trillion subscriptions from local and foreign portfolio investors. Noting the steep influx of funds at the auction, the CBN reduced the interest rate on 364-day bills to 20.7% from 21.12%.
In the foreign exchange market, the Naira strengthened by 0.55% in the official market, ending at ₦1,136.04 per US dollar on Monday. Forex users’ requisitions or foreign currency demand were sufficiently met by the volume of US dollars in the official window.
The exchange rate continues to improve in the alternative market due to the apex bank supply side support of $10,000 in sales to Bureau de Change (BDC) operators at the below FX spot market rate.
According to a channel check, the naira closed at ₦1,080 to the US dollar amidst an expectation that the CBN would inject additional forex into the currency market for invisible FX users. #Naira Records Gain, BDCs Sell US Dollar at N1,050.
