BY BAMIDELE FAMOOFO
At the foreign exchange market last week, the availability of the new banknote fiasco took a different turn as banking institutions and businesses rejected the old banknotes.
This comes as the deadline day set by the Central Bank of Nigeria draws closer amidst the demand and supply mismatch.
Consequently, FX backlog continues to pile while manufacturers, importers and travelers turn attention to the open market in the search for the greenback.
At the investors’ and exporters’ FX window, the Naira skid by N0.25 or 0.05 percent week on week to close at N461.75/USD from N461.50/USD in the previous week despite the growing FX pressure on the Naira and the newly redesigned currency circulation battle.
On the other hand, the Naira gained strength against the dollar at the parallel market as the naira value appreciated by 0.27 percent or N2 week on week to N748/ USD from N750/USD last week. Thus, market players maintained bids between N460/USD and N465/ USD at the I&E segment while in the open market, bids ranged between N745/USD and N752/ USD.
A look at activities at the Interbank Foreign Exchange Forward Contracts market, the spot exchange rate remained unchanged from the previous week as it closed the week at N445/USD from last week.
Also, in an analysis of the Naira/USD exchange rate in the Naira FX Forward Contracts Markets, the trend across all forward contracts tenors depreciated by 0.03 percent, 0.48 percent, 0.47 percent, 1.21 percent and 0.23 percent week on week to close at contract offer prices of N479.76/ USD, N487.37/ USD, N488.83/USD, N506.47/USD and N532.70/USD respectively.
In the oil market in the review week, Oil price oscillation was non-stop as it traded at above $88 per barrel as Russia and Ukraine war enters a new level in the midst of recovery in China economy and increasing recession fears and just as the geopolitical tension, high interest rate and inflation across the globe continue to threaten the world.
On the home front, analysts saw the Bonny light crude price rally in the oil market by 1.41 percent or (USD1.22) week on week to close at USD87.69 per barrel from USD86.47 per barrel.
“Financial experts noted that as the deadline for depositing of old banknotes inch closer, demand pressure is expected to stay unbaiting following the limited supply of the local currency as we transcend gradually into the cashless economy while we stay on the look for the multiplier effect of the cashless policy across all facets of the economy.”
At the money market, the CBN allotted T-bills worth N220.53 billion to fully refinance the N198.34 billion worth of matured Treasury bills. Notably, given the strong demand (bid-to cover ratio of 4.73x), the stop rate for all of the maturities declined.
Specifically, 364-day bills fell further to 4.78 percent (from 7.30%). Also, 91- day bill and 182- day bill rates fell to 0.29 percent (from 2.00%) and 1.80 percent (from 4.33%), respectively.
In tandem with the mood in the primary market, despite the MPC raising the policy rate to 17.50% (from 16.50%), NITTY for all maturities tracked moderated.
Specifically, NITTY for 1 month, 3 months, 6 months, and 12 months maturities fell to 1.00 percent (from 1.79%), 1.93 percent (from 2.53%), 2.95 percent (from 3.50%), and 4.14 percent (from 6.05%), respectively.
Meanwhile, the OMO space was a bit busy as CBN auctioned N14 billion worth of bills, less than the matured OMO bills worth N40 billion. Despite the N26 billion net inflow, NIBOR rose for most tenor buckets, while overnight funds declined to 10.88 percent (from 11.13%) and NIBOR for 1 month, 3 months, and 6 months climbed to 12.50 percent (from 12.13%), 13.00% (from 12.85%), and 13.81 percent (from 13.55%), respectively.
