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Naira falls against dollar on back of strong demand

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The naira yesterday depreciated by 15 kobo against the US dollar at the inter-bank market following increased demand by the end users.

After trading on Tuesday, the local currency closed at N162.15/$ as against N162.00/$ the previous day, according to data obtained from the Financial Markets Dealers Quotations (FMDQ).

While some oil companies may have sold dollar on Tuesday, the Central Bank of Nigeria (CBN) on Monday sold a total of $349.9 million from $350 million it offered to 21 deposit money banks at the rate of N155.73/$ at the bi-weekly Retail Dutch Auction System (RDAS).

The NGN strengthened 0.1% against the USD in the inter-bank (-1.3% YTD) on August 18, 2014. Interbank stability was driven by robust USD supplies from CBN’s RDAS window and to a lesser extent, inflows from Julyoil companies. Importantly, NGN also strengthened against the USD at the BDC segment, following a successful CBN re-capitalisation exercise and re-opening of USD sales to BDCs by the banks, a report from Ecobank Nigeria stated.

Inter-bank rates on Tuesday rose by 2.7 percent from 14.24 percent the previous day to 14.62 percent. The Nigerian Inter-Bank Offered Rates (NIBOR) for overnight tenure increased to 14.20 percent from 13.54 percent the previous day. Also 1 month, 3 months and 6 months tenures climbed from 13.90 percent, 14.44 percent, 15.07 percent the previous day to 14.31 percent, 14.72 percent and 15.24 percent, data from FMDQ has revealed.

The inter-bank rate rose by 142bp on Monday. Increased inter-bank funding requirements to cover treasury bills, FX and monthly FGN Bond transactions continued to weigh on money market performance, the report said.

Article Credit: Businessdayonline

Updated 5 Years ago

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Tags:     Naira     Dollar     FMDQ     YTD     FGN Bond