- Again, Naira wins in FX market with 0.62% rise against dollar
The domestic bourse sustained its bearish trend for the third consecutive day on Thursday as the All-Share Index declined by 0.43 percent to close at 103.736.08 points.
Resultantly, the market capitalization of listed equities plunged by 0.43 percent to N58.65 trillion.
In the foreign exchange market, the Naira strengthened by 0.62 percent in the foreign exchange market, ending at ₦1,255.07/$ in the official market.
In the parallel market, the Naira closed at ₦1,235/$.
Notable contributors to Thursday’s losses in the equities included CILEASING, MBENEFIT, TANTALIZER, UNITYBANK, and JAIZBANK, experiencing share price depreciations by -9.79 percent, -8.57 percent, -7.89 percent, -7.39 percent, and -7.23 percent, respectively.
Despite the prevailing negative market sentiment, trading activity levels on the Exchange demonstrated improvement, with total traded volume and value surging by 20.42 percent and 75.57 percent to reach 487.73 million units and N15.64 billion, respectively.
However, total deals declined by 14.05 percent to 8,908 trades.
Sub-sector performance varied, with the Banking and Industrial Goods indexes declining by 2.67 percent and 0.09 percent, respectively, while the Insurance and Consumer Goods indexes advanced by 0.43 percent and 0.46 percent. The Oil/Gas sector exhibited a lull performance. By the session’s end, ZENITHBANK led in both volume and value, with 161.68 million units traded, amounting to N7.03 billion across 527 deals.
In the money market, the Overnight NIBOR surged by 15bps to close at 23.40 percent, indicating a liquidity crunch.
In contrast, prominent money market rates like the open repo rate (OPR) and overnight lending rate (OVN) declined by 153bps and 2bps to close at 23.81 percent and 25.16 percent, respectively.
In the Nigerian Interbank Treasury Bills market, the Nigerian Interbank Treasury Bills True Yield exhibited a mixed trend.
The secondary market for Nigerian Treasury Bills saw negative trading, and as a result, the average yield advanced by 58bps to close at 17.34 percent.
In the secondary market for FGN Bonds, trading activity was on a cautious thread, thus the average yield advanced marginally by a base point to close at 19.30 percent.
In Nigeria’s sovereign Eurobonds market, notable bullish sentiment led to significant positive activity across all yield curve segments, resulting in a 16 basis points decrease in the average yield to 9.48 percent.
The naira, on Wednesday continued its gain against the United States dollars, appreciating both at the official foreign exchange and parallel markets, to the delight of many Nigerians.
At the Nigerian Autonomous Foreign Exchange Market, the naira gained N16 or 1.26 per cent as the dollar was quoted at N1,262.85/$ on Wednesday, stronger than N1,278.58 closed on Tuesday, data from the FMDQ Securities Exchange indicated.
This means the local currency has steady dollar supply, pushes naira to 1,262/$ and continues its positive streak against the green with expectations of further appreciation.
The appreciation of the local currency was attributed to the several foreign exchange policies implemented by the Central Bank of Nigeria, to boost dollar supply and enhance transparency in the FX market.
On June 14, 2023, the CBN abolished market segmentation and collapsed all into the Investors & Exporters window (Now, Nigerian Autonomous Foreign Exchange); and re-introduced the Willing Buyer, Willing Seller framework, among other reforms.
In January 2024, the CBN directed the International Money Transfer Operators to quote an exchange rate for naira payout to beneficiaries based on the prevailing market price.
The banking and finance sector regulator, in February 2024, discontinued any form of cap on the spread on interbank Forex transactions and restrictions on the sales of interbank proceeds.
In the same month, the CBN limited the payout of Personal Travel Allowance and Business Travel Allowance to electronic channels only.
In March 2024, the volatility of the naira was reduced following several reforms by the CBN to improve transparency and inflows into the FX market.
Currency traders attributed the naira appreciation to waning demand for the greenback and the decision of the apex bank to sell foreign exchange to operators.
A BDC operator at Wuse Zone 4, Ibrahim Yahu, stated, “The demand for dollars has really gone down and the naira is appreciating because of the new rate determined by the CBN for traders.
“The CBN initially started selling to us at N1, 251 but they gave another rate last week Thursday at N1, 190 and that is the reason for the new fresh drop of the dollar. The CBN selling directly to us has really helped trading activities.”
Similarly, the intra-day high was quoted at N1,296.00 on Wednesday from N1,312/$1 recorded on Tuesday, while the intra-day low settled at 1,210.00, an improvement from N1,250/$1.
This also represents the slimmest exchange rate disparity observed between the intra-day high, intra-day low, and the closing rate, all falling under N130.
The average daily turnover reported was increased to $116m- $111.8 million.
Also, at the parallel market, the naira strengthened to N1, 250 to a dollar, gaining 0.8 percent (N10) over N1, 260 closed on Tuesday at the parallel market, popularly called the black market.
Compared to the level on February 20, 2024, naira has gained 46 percent of its value against the dollar from the lowest of N1, 825/$ on the parallel market.
