The naira on Tuesday appreciated by 2.4 per cent to stem pressure from the foreign exchange market.
At the official market, the local currency appreciated to N1,499.07 against the dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) from N1,534.39 that it was on Monday.
According to the FMDQ Exchange, the Naira against the dollar was hovering around N1,550.00 high and N1,000 low to eventually close at N1,499.07 against the dollar on Tuesday.
The impact of the CBN’s directive to banks to sell down part of their net long US dollar positions seemed to have been short-lived, even if turnover in the foreign exchange markets did improve significantly for a while.
The gap between the parallel and the NAFEM market has reappeared, however. This further reinforces the need to improve the supply of US dollars into the market and we wait to see whether the reforms attract foreign portfolio investors and encourage other flows.
Market analysts attributed the current state of Naira to a consistent uptick in the demand for dollars that has persisted since the beginning of January.
Meanwhile, the overnight lending rate expanded by 19 basis points to 16.3 percent, in the absence of any significant funding pressure on the system.
Trading in the Treasury bills secondary market was bullish, as the average yield contracted by 16bps to 15.2 percent.
Across the curve, the average yield dipped at the short (-57basis points) and mid (-1 basis point) segments following interest on the 9DTM (-427 basis points) and 177DTM (-1 basis point) bills, respectively, but closed flat at the long end. Similarly, the average yield dipped by 5bps to 17.9 percent in the OMO segment.
Meanwhile, activities in the Treasury bonds secondary market were bearish, as the average yield expanded by 24bps to 15.8 percent.
Across the benchmark curve, the average yield increased at the short (+43 basis points), mid (+49 basis points), and long (+5bps) segments due to profit-taking activities on the JAN-2026 (+256bps), APR-2032 (+105bps), and JUN-2038 (+33bps) bonds, respectively.
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