Naira to remain stable as dollar demand weakens
Written by Henry on February 2, 2018
The naira is likely to remain stable against the United States dollar next week as demand for the greenback weakens whenever the unit trades below 360 per dollar.
Foreign exchange traders said most forex users were not willing to source dollars weaker than N360 at the Investors & Exporters FX window and that offshore investors had been buying local debt in search of yields, boosting liquidity on the currency market, Reuters reported on Thursday.On the official market, the naira was quoted at 305.70, supported by the Central Bank of Nigeria’s regular intervention.
Meanwhile, the Central Bank of Nigeria raised N252.88bn ($827m) at the Treasury bill auction on Wednesday as investors piled demand into the higher yielding one-year debt.
The CBN sold N177.22bn of one-year debt at a rate of 13.7 per cent. It auctioned N6.09bn of three-month debt at 12 per cent, and N69.57bn of six-month maturity debt at 13.65 per cent. Total subscription stood at N355.2bn.
Traders said some offshore funds participated at the auction, helping boost dollar liquidity on the currency window for investors to keep naira rates stable.
The central bank has maintained tightened liquidity to attract foreign buyers.
The Debt Management Office is planning to raise $2.5bn through Eurobonds in the first quarter to refinance a portion of its domestic treasury bill portfolio at lower cost.
It repaid N198bn worth of treasury bills in December, instead of rolling them over, to lower costs.
Investors bid as high as 18.5 per cent for the one-year paper. However, the government has been offering debt at lower yields to track declining inflation, which fell for the eleventh straight month in December, to 15.37 per cent