Naira slips to N521/$1 in street trading with dollar scarcity amid unmet FX demands

Currency pressure stemming from the increasing demand for the greenback, which is scarce at the moment, has continued to weigh on the Naira leading it to trade at N521 to the dollar at the parallel market segment of the foreign exchange market.

This rate, according to traders in Lagos, is as a result of the level of demand, which now clearly outweighs the supply given the unmet demands in the NAFEX window. In sync with the street exchange rate, at the I&E FX market, Naira depreciated by 0.24 percent as the dollar was quoted at N412 as against the last close of N411. Most participants maintained bids at between N400 and N413 per dollar.

Into the money market on Wednesday, rates look likely to remain elevated due to relatively low liquidity in the system as the Overnight (O/N) rate decreased by 2.42 percent to close at 13.33 percent as against the last close of 15.75 percent, while the Open Buy Back (OBB) rate decreased by 2.50 percent to close at 13 percent compared to 15.50 percent on the previous day.

The Nigerian Treasury Bills secondary market saw red with the average yields across the curve rising by 16 basis points to close at 4.95 percent from 4.79 percent on the previous day. Also, the average yields across medium-term and long-term maturities extended by 8 basis points and 31 basis points, respectively.

However, the average yield across the short-term maturities stayed unmoved at 3.47 percent with yields on 8 bills advancing as the 28-Apr-22 maturity bill recorded the highest yield increase of 83 basis points, while yields on 10 bills remained unchanged.

At the primary market auction held on Wednesday, the CBN offered bills worth N157.21 billion across 91-day (N3.12 billion), 182-day (N32.71 billion), and 364-day (N121.38 billion) tenors.

In the OMO bills market, the average yield across the curve remained unchanged at 5.99 percent. Average yields across short-term, medium-term, and long-term maturities closed flat at 5.36 percent, 6.21 percent, and 6.68 percent, respectively.

Elsewhere, the FGN bonds secondary market closed on a mildly bullish note as there was no trigger to light up activities. Though the average bond yield across the curve cleared lower by 4 basis points to close at 8.38 percent from 8.42 percent on the previous day, average yields across short tenor, medium tenor, and long tenor of the curve decreased by 3 basis points, 5 basis points, and 8 basis points, respectively.

Meanwhile, the FGNSB 14-NOV-2021 bond was the best performer with a decline in yield of 104 basis points, while the FGNSB 11-MAR-2022 and FGNSB 13-MAR-2022 bonds were the worst performers with an increase in yield of 52 basis points each.