Naira closes slightly stronger at N282.03 to dollar at interbank market

The Naira on Friday closed slightly stronger against the United States dollar as it traded 0-33 per cent stronger on the spot rate of N282.03 to the dollar. This is against Thursday’s N282.97, but still lower than N281.23 to a dollar traded on Wednesday.

The Naira gained N4.733 to the British Pounds as it traded for N375.4772 to the Pounds Sterling on Friday against Thursday’s close of N380.2105. It traded at N314.3983 to the Euro on Friday as against N314.1583 to the Euro which it closed at on Thursday and N42.3672 to the Chinese Yuan on Friday as against Thursday’s close of N42.5692 at the interbank market.

It continued to lose steam against the dollar at the parallel market, in spite of the new forex regime, but gained against the British pound.

Traders at the parallel market said the scarcity of the greenback had forced the naira to depreciate further, as the Nigerian currency lost N4 to exchange at N351, from N347 it traded on Wednesday, representing a depreciation of 1.14 per cent.

The Naira firmed against the pound sterling but weakened against the euro as it traded at N458 and N380, from N470 and N375 it exchanged on Wednesday.

Meanwhile, Nigeria’s interbank overnight rate fell to 5 percent on Friday from 15 percent a week ago, as cash from maturing treasury bills and payments by the government to contractors helped boost liquidity.

The increased cash flow left the money market with a N267.10 billion surplus balance on Friday, reversing the N300 billion shortfall of a week ago and pushing down the cost of borrowing among commercial lenders.

“There was repayment of about N115.03 billion in matured treasury bills at the Open Market Operations (OMO) on Thursday, while the release of an unspecified amount of cash payment to government contractors also boosted system liquidity,” one dealer said.

Many banks had approached the central bank’s discount window to borrow short-term cash penultimate week to enable them meet obligations and ease liquidity pressures, traders said.

Stakeholders said the expected release of capital spending by the federal government to re-inflate the economy should inject more cash into the money market in the coming days, which should impact positively on the interbank rate.

Meanwhile, analysts at Cowry Assets Management Limited said over the weekend that latest data from Central Bank of Nigeria’s Purchasing Managers’ survey pointed to a likely recession for Nigeria as recent economic indicators confirmed pessimism amongst businesses and consumers alike. The Manufacturing sector’s composite PMI contracted to 41.9 index points in June 2016 (faster than 45.8 in the preceding month) as contraction in production level increased to 40.2 in June (from 47.9 in May).