Naira on Monday sustained stability against the dollar, closing at N199.05k/$ at the interbank foreign exchange as dealers and analysts await the decision of the Monetary Policy Committee (MPC) today.
The MPC commenced its fifth session this year yesterday and will conclude today to review developments in the global and domestic economy, together with the financial market since its last meeting in July 2015.
Consequently, the local currency strengthened against dollar by N4 or 1.79 percent at the Bureau de Change segment of the foreign exchange as it closed at N220/$ compared with N224/$ on Friday last week. It also gained N3.50k or 1.55 percent against the dollar, closing at N222/$ on Monday from N225.50k/$ last week Friday at the parallel market.
Against other currencies, naira closed stable against the pounds sterling, closing at 338 pounds at the BDC and 350 pounds at the parallel market.
Meanwhile, analysts expect no major policy change on the naira after the MPC meeting today. “Given the authorities preference for a strong naira, we expect the fixed peg of about N199/$1 to be left unchanged,” Yvonne Mhango, Renaissance Capital’s sub-Saharan Africa (SSA) economist, said.
Adesoji Solanke, banking analyst at Renaissance Capital, noted that the naira deposits moved to the TSA amounted to N345 billion, significantly lower than (or 53% of) the N652 billion in federal naira deposits we were expecting to move.
We do not have figures on the value of federal FX deposits that were moved to TSA (1Q15 system numbers put FX federal deposits at NGN570 billion; added to federal naira deposits, this amounts to NGN1.2 trillion), according to Solanke.