Nigerian currency depreciated by 0.28 per cent to N361 against the dollar in the parallel market, underpinned on foreign portfolio investors decision to repatriate the funds to safety.
Meanwhile, the Naira strengthened by 0.09 per cent to N362.78 in the I&E FX window as total turnover in that segment of the foreign exchange market rose by 54.83 per cent to USD341.56 million, consummated within the USD/N330.00-N364.75 band.
The pressure on the local currency could be traced to capital flight occasioned by the political uncertainty that is hovering of the country, said Moses Ojo, head, Research and Business Development, PanAfrican Capital Plc.
Nigeria’s foreign reserves, which peaked around $ 47.85 billion in July 2018, has dropped to $45.25 billion on Wednesday as the Central Bank continues to defend the Naira.
“We expect Naira to continue to weaken as the country heads towards the general elections. Although, with the external reserves still at over $45 billion, the CBN would continue the Naira, but it would get to a point where it would not be able to defend it that would be forced to allow it devalue at the parallel market,” posited Ojo.
More so, the overnight lending rate rose by 216 basis points to 11.08 per cent, due to funding for the CBN’s OMO auction.
The apex bank offered a total of N350billion — NGN50 billion of the 119 Modified Duration to Maturity (DTM), NGN100 billion of the 189DTM, and NGN200.00 billion of the 364DTM — worth of bills to the market, wherein no sales were recorded.
Sentiments in the NTB market were bearish, as market players anticipated higher yields at the OMO auction. Consequently, average yield rose 73 bps to 14.03 per cent.
Proceedings in the bond market were also bearish, as yields rose by 16 basis points, on average, to 15.28 per cent.
And there was sell pressure across the short (+39 bps), mid (+1 bp), and long (+11 bps) ends of the curve.