...analysts expects Naira to dip further The inability of Central Bank of Nigeria (CBN) to meet foreign exchange (forex) demand in the last two weeks may have led to the nation's currency losing 109 kobo as it exchanged for N148.40/$ as against N149.49/$, Afrinvest has stated in its current Nigeria update. FSDH Weekly had said the apex bank had offered and sold a total of $400 million forex a week ago at the Wholesale Dutch Auction System (WDAS) ended March 14, 2010 while the banks had demanded foreign exchange worth $546.28 million. "The CBN's inability to meet its demand for foreign exchange in its last four auctions resulted in the devaluation of the naira by N1.09/$1 to N148.40/$1". But the Naira, this week, recouped 10 kobo closing at N148.30 to the dollar during the last Wholesale Dutch Auction System (WDAS) on March 24, 2010. This brings the depreciation down to 99 kobo in three weeks. Afrinvest is pessimistic concerning the future direction of the Naira, saying: "We expect the Naira to dip further as the market continues to respond to supply levels". Analysts say the implication of a depreciating Naira is that when crude oil prices are good in the international market, Nigeria will earn more Naira to execute various projects. They, however, said that in the last two weeks, the inter-bank market saw a 65 kobo appreciation in value of the Naira against the dollar to N149.90/$1 from N150.55/$1, while the Bureau De Change (BDC) and parallel exchange rates continue to move in tandem, ending up at N150.50/$1 and N152.00/$1. On the other hand, the research outfit said the liquidity in the inter-bank market persisted over the fortnight, saying open buy back (OBB) and overnight rates remained constant during the period reaching 1.4 percent and 2.0 percent, respectively in the week, ending at 1.1 percent as a result of FAAC inflow of N158.2 billion ($1.1 billion) which came into the system. Reports say in the past one month, the Federal Government has shared $4.87 billion to the various tiers of government. Analysts believe that this huge inflow from the government has helped keep the financial system liquid. According to Afrinvest, "Looking ahead, we believe that the market would maintain its liquidity status with rates fluctuating within current levels in response to the approval of a $1.0 billion (N150.3 billion) from the excess crude account entering the system this week". The Debt Management Office (DMO) through the reopening of the 3-year FGN Bond with a 5.50 percent yield and will end February 20, 2013, the10-year FGN Bond with a 7.00 percent yield to end October 23, 2019 and the 20-year FGN Bond with a 8.5 percent yield to end November 20, 2029, injected N70.0 billion ($466.0 million) into the system in its monthly auction on March 17, 2010. The subscription rate to these debt instruments signifies a sustained and even increasing interest in the bond market participation predominantly by institutions and resulted in auction rates across the different maturities below market levels.
Naira loses 109k over CBN's inability to meet forex demand (http://www.businessdayonline.com/index.php?option=com_content&view=article&id=9582:naira-loses-109k-over-cbns-inability-to-meet-forex-demand-&catid=85:national&Itemid=340)
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