Naira depreciates after CBN’s rate hold
Written by on March 24, 2022
Nigeria’s currency on Tuesday depreciated by 0.18 percent to close at N417.00 per dollar, compared to the last close of N416.25 on Monday at the Investors and Exporters (I&E) forex window.
This came a day after the Central Bank of Nigeria (CBN) kept its benchmark interest rate known as the Monetary Policy Rate (MPR) at 11.5 percent.
Data from the FMDQ show that most foreign exchange participants maintained bids between N406.00 (low) and N444.00 (high) per dollar.
The CBN did not consider loosening because it felt that loosening would trigger foreign exchange demand pressure, as the excess liquidity would exert demand pressure on the FX market and trigger a naira depreciation which would also fuel inflation.
Pressure on the foreign exchange continued at the alternative market as the dollar is currently being quoted at N584 as of Tuesday.
At the money market, on Tuesday, the Overnight (O/N) rate increased by 2.00 percent to close at 11.67 percent as against the last close of 9.67 percent on Monday.
The Open Repo (OPR) rate also increased by 2.00 percent to close at 11.00 percent compared to 9.00 percent on the previous day.
A report by the FSDH Research noted that the Nigerian Treasury Bills (NT-Bills) secondary market closed on a mildly positive note with average yield across the curve decreasing by 6 bps at 3.23 percent from 3.29 percent on the previous day.
Analysts at Parthian Partners, Africa’s premier inter-dealer broker, said the bond market on Tuesday had a mildly bearish session, with activity skewed to the long end of the curve. Players cherry picked few attractive offers available, leading to a handful of trades being executed. The 2036s and 2042s were the most active on the day.