In the foreign exchange market on Monday, the naira saw another increase vs the US dollar. According to the most recent data gathered by Bizwatch Nigeria, however, the exchange rate rebound looked to have slowed down after lasting for weeks throughout foreign currency markets.
The naira gain streak has continued thus far. Amidst anticipations that the Central Bank will inject more US dollars into the currency markets, the exchange rate at the Nigerian independent forex market increased to N1136 per greenback. The majority of Bloomberg currency analysts have shifted to supporting naira bulls.
In light of the local currency exchange rate’s decline relative to the US dollar, Goldman Sachs updated its fair value estimate to N1000. Over a 12-month period, the global investment business had projected an exchange rate of N1,200.
The monetary authority has maintained its position that the naira is grossly undervalued. The Financial Derivative Company sees the exchange rate at N910.10 due to improved market conditions.
FX market confidence has been boosted strongly following signals that the apex bank under Yemi Cardoso has resolved to use policy re-direction to remove bottlenecks created in the forex market by the previous administration. Due to the success recorded so far over the ongoing FX reform, there has been an increase in US dollar inflows into the company following an attractive interest offering on Treasury and OMO bill sales.
MarketForces Africa reported that the Central Bank (CBN) trimmed the interest rate on Treasury bills on Friday following an increase in demand for naira assets. At the primary market auction on Friday, the CBN recorded N1.82 trillion subscriptions from local and foreign portfolio investors. Noting the steep influx of funds at the auction, the CBN reduced the interest rate on 364-day bills to 20.7% from 21.12%.
In the foreign exchange market, the Naira strengthened by 0.55% in the official market, ending at ₦1,136.04 per US dollar on Monday. Forex users’ requisitions or foreign currency demand were sufficiently met by the volume of US dollars in the official window.
The exchange rate continues to improve in the alternative market due to the apex bank supply side support of $10,000 in sales to Bureau de Change (BDC) operators at the below FX spot market rate.
According to a channel check, the naira closed at ₦1,080 to the US dollar amidst an expectation that the CBN would inject additional forex into the currency market for invisible FX users.
