Nigeria’s currency market registered $327 million worth of trades on Monday, about six times more than its usual volume, the market regulator told Reuters.
That included a single $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds, Bola Onadele, the managing director of FMDQ OTC Securities Exchange, said in an interview. Other transactions were carried out from 314.50 to 317.34 per dollar.
Average trading is around $50 million a day on normal days. It might reach $100 million on days the central bank intervenes in the currency market.
Traders also said the central bank sold an undisclosed amount of dollars, close to the end of market session, to help prop up the naira. The currency closed at 305.50 on Monday, around the level where it’s closed for the past week.
Monday’s surge in trading came after the central bank said on Friday that it would offer 212.85 billion naira ($675 mln) in treasury bills maturing between 91 days and one year on Wednesday. The debt will be sold on Wednesday.
The bank has been selling short-dated open market bills at yields as high as 18 percent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.
The crisis ultimately led the central bank to let the naira’s value float, in June. From its controlled rate of 197 naira to the dollar, the Nigerian currency plunged to as much as 309 to the dollar on the interbank market and 412 to the dollar on the black market . ($1 = 315 naira).
The Naira fell to a new low of N413 against the United States dollar on Monday, August 29, amid the continued scarcity of foreign exchange in the country.
The local currency had hit an all-time low of N412 against the greenback at the parallel market on Friday, August 26, after closing at N409/dollar on Thursday, August 25.
The British pound and the Euro went for N530 and N455 on Monday at the parallel market.
Aside the ban on the banks, forex dealers said the demand pressure on the dollar, is being mounted by summer travellers and parents paying schools fees of their children studying overseas.
It was gathered that some Bureau de change operators have been finding it difficult to access their forex account and get dollar supply, after the central bank suspended nine commercial lenders from the market last week.
However, sources at the Central Bank of Nigeria (CBN) confirmed on Monday that discussions was still ongoing between the apex bank and the Body of Bank CEOs, following which CBN will consider the plea by eight bank executives whose institutions were suspended from the foreign exchange (FX) market last Tuesday.
It was gathered that the CBN might consider giving them more time to return the Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits held by the affected banks to the Treasury Single Account (TSA) domiciled with the CBN.
At the interbank market, the naira closed at N318.83 to the dollar as against N314.95 on Friday, August 26, with traders saying interbank rates would ease this week when part of July’s budget allocation must have entered the banking system.
The local currency at the same market strengthened slightly against pound Sterling as it exchanged at N399.1969 compared to Friday’s N 402.9965 the British pound. It also strengthened to N341.2741 on Monday as against Friday’s N344.5585/Euro
Nigeria’s currency market registered $327 million worth of trades on Monday, about six times more than its usual volume, dealers said.
Reuters quoted, Bola Onadele, the managing director of FMDQ OTC Securities Exchange as saying that the trades included a single $270 million transaction at N345 per dollar, by foreign investors buying local currency bonds. Other transactions were carried out from N314.50 to N317.34 per dollar.
Average trading is around $50 million a day on normal days. It might reach $100 million on days the central bank intervenes in the currency market.
Traders also said the central bank sold an undisclosed amount of dollars, close to the end of market session, to help prop up the naira. The currency closed at 305.50 on Monday, around the level where it’s closed for the past week.
Monday’s surge in trading came after the central bank said on Friday that it would offer 212.85 billion naira ($675 mln) in treasury bills maturing between 91 days and one year on Wednesday. The debt will be sold on Wednesday.
The bank has been selling short-dated open market bills at yields as high as 18 percent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.
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