Not long ago, between January and February 2009, the gap between both rates was nearly as wide as N50/$, and specifically, a few weeks ago, between May 22 and June 26, the gap was still as wide as N43.37/$, when the parallel market rate, according to the FSDH Weekly report, was
N180/$ and the official was N146.37/$.It would be recalled that a few days before the former governor of Central Bank of Nigeria (CBN), Chukwuma Soludo left office; he announced that the manacled forex market would be fully liberalised within three months. Though the announcement had some anticipated impact on the market, other announcements made by the CBN, under new governor Sanusi Lamido Sanusi, saw more forex flow into the parallel market, thereby forcing down exchange rates.
The move has kept the official rate oscillating between the neighbourhood of plus or minus five kobo, thus keeping official exchange rate almost stable. The value of Naira appreciated at the parallel and inter-bank markets, while it depreciated at the official market.Â
At the parallel and inter-bank markets, the value of naira appreciated by N4.00 and 92k to close the week at N164.50/$1 and N148.37/$1, compared with the previous week’s figures of N164.50/$1 and N149.29/$1 respectively; while at the official market, the value of the naira depreciated by 6k to close the week at N146.76/$1, compared with the previous week’s figure of N146.70/$1.
At the foreign exchange auction held on Monday, June 22, the CBN offered $150 million, same as it offered in the previous week, while it sold a total of $153.70 million. The sale was 2.47 percent higher than what was on offer.Â
On Wednesday, June 24, the CBN offered $150 million, while it sold $245,277; the sale was 99.84 percent lower than what was offered. Last week, a total of $300 million was offered, while $153.95 million was sold; the sale was 48.68 percent lower than what was offered in the week.
Meanwhile, available data showed that the 7-day Nigerian Inter-Bank Offer Rate (NIBOR) closed the week at 20.00 percent, a 195 basis point increase from the previous week’s figure of 18.04 percent.Â
Also, the 90-day NIBOR closed the week at 21.42 percent, a 175 basis point increase from the previous week’s figure of 19.79 percent. As at the time of this report, we were not able to obtain the Treasury Bills transactions for the week from the Central Bank of Nigeria.Â
However, the transactions in the week ended June 19, 2009 indicated that at the 91-day Treasury bill auction held, a total of N15 billion worth of bill was on offer, while N18.82 billion was subscribed leading to an oversubscription of 25.5 percent. The bill was issued at a discount rate of 3.65 percent.
At the 182-day Treasury bill auction, a total of N30 billion worth of bill was on offer, while N33.51 billion was subscribed leading to an over subscription of 11.7 percent. A total of N10 billion worth of bill was repaid, leading to an outflow of N20 billion from this segment of the market. The bill was issued at a discount rate of 6.13 percent.
Also last week, at the re-opening of the 3-year FGN Bond auction, a total of N20 billion was offered, while N40.07 billion was subscribed leading to an over subscription of 100 percent. The bond was issued at a marginal rate of 10.10 percent, while it carried a coupon rate of 11.80 percent.
At the re-opening of the 5-year FGN Bond auction, a total of N10 billion was on offer, while N35.69 billion was subscribed leading to an over subscription 256.9 percent. The bond was issued at a marginal rate of 10.70 percent, while it carried a coupon rate of 12.50 percent.Â
At the re-opening of the 20-year FGN Bond auction, a total of N20 billion was on offer, while it was 119.7 percent oversubscribed at N43.92 billion. The bond was issued at a marginal rate of 12.33 percent, while it carried a coupon rate of 15 percent.
In all last week, a total of N95 billion was withdrawn from the primary segment government securities market, while N10 billion was injected leading to a net withdrawal of N85 billion.
At the secondary segment of the government securities market, a total of N21.09 billion worth of EDW (Expanded Discount Window) was withdrawn.
We expect a total of N84.35 billion to mature and be repaid into the market in the coming week; as we do not expect any major inflow into the market next week, liquidity tightness should dominate the market and consequently, inter-bank rates are expected to inch up during the week.
At the foreign exchange market, we expect further convergence of the parallel market rate with the official market rate, as a result of the recent policy measures of the CBN in the forex market.