The naira stability witnessed in the previous weeks at the inter-bank foreign exchange market is expected to continue this week amidst political uncertainty, analysts have said. The naira remained stable at the inter-bank market closing at N199.11/ US$1.00 last week. The domestic currency rose to N199.13/US$1.00 on Monday and peaked at N199.14/ US$1.00 on Tuesday. Customer trade obligations during the week were partially met by dollar auction by oil companies.

However, commercial banks and their customers continued to rely on intervention from the apex bank to fill excess demand, even as CBN maintained dollar sales at N197/$US1.00 and purchased at N196/US$1.00 all week. Stability of the local unit was further driven by the decision of the Monetary Policy Committee (MPC) to keep all policy rates at their current levels on Tuesday, March 24 at the conclusion of its second sitting for the year.

According to analysts at Afrinvest, the continued bullish outing noticed in the equities market during the week accounted for the sustained stability of the naira. This, according to them, is attributable to likely capital inflow resulting from bargain hunting by foreign portfolio investors. “We expect the local unit to remain stable in the near term.

However, we imagine that an unpopular outcome of the general election may be a downside to this”, the analysts said in a report. On the other hand, analysts at Cowry Asset Management Limited expect the Nigeria Inter-Bank Offered Rates (NIBOR) to taper this week on the back of expected inflows barring any significant outflows. This week treasury bills worth N80 billion will mature via the primary market, viz: 149-day bills worth N40 billion and 157-day bills worth N40 billion.

Last week, treasury bills worth N356.95 billion matured via open market operations, viz: 169-day bills worth N50 billion; 160-day bills worth N30 billion; 161- day bills worth N50 billion; 164-day bills worth N40 billion; 168-day bills worth N50 billion; 177-day bills worth N30 billion; 182-day bills worth N33.78 billion; and 364-day bills worth N73.17 billion. In response to the liquidity surge, the apex bank auctioned treasury bills worth N294.61 bil- lion – N97.82 billion worth of bills were auctioned via the primary market while N196.79 billion worth of bills were auctioned via Open Market Operations – 90-day bills worth N14.04 billion (marginal rate fell to 10.99% from 11.08%); 180-day bills worth N10.61 billion (marginal rate fell to 15.63% from 15.86%); 364-day bills worth N73.17 billion (marginal rate fell to 17.43% from 18.12%); 184- day bills worth N108.83 billion (at a yield of 16.05%) and 192-day bills worth N87.95 billion (at a yield of 16.11%).

“In line with our prediction, Nigerian Inter-Bank Offered Rates declined for most tenor buckets – 1 month, 3 months and 6 months rate fell to 15.52% (from 15.57%), 16.52% (from 16.62%) and 17.25% (from 17.58%), respectively. However, overnight funds rate rose to 13.38% (from 11.29%)”, Cowry Asset said in a report.

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