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Interbank rates to stabilise on CBN $1.5m sales to banks - Businessday
Relative stability of the naira witnessed at the interbank spot market last week is expected to continue in the week as the Central Bank of Nigeria (CBN) continues its daily $1.5 million foreign exchange sales to banks.
Foreign exchange sales to banks were crossed at a fixed rate of N304.5/$ from Monday to Friday while interbank market rate held steady at N305/$ from Monday Friday, save for Wednesday when interbank closed at N305.25/$, according to a report by Afrinvest Securities Limited.
At the parallel market, however, the local unit continues to trade with significant spread (within a range of N170-N177) to the greenback as supply constraints and control measures drive rates higher. The naira closed week at N482/$ in the parallel market compared with N475/$ on Monday, depreciating 1.5 percent week-on-week.
At the FMDQ OTC derivatives market, the value of FX futures opened contract closed the week at $3.8 billion higher than $3.6 billion in the previous week. The NGUS NOV 2017 contract, which replaced the 2016 equivalence improved from $89.50 million last week to $100.00 at the close of the week at a contract price of N262/$ as buyers take advantage of the attractive hedging opportunities presented by the instruments compared with contracts with higher prices. Meanwhile, the NGUSOCT 2017 contract currently presents the most attractive hedging opportunity at a contract price of N260/$.
However, Nigeria external reserves rose 3.3 percent in the month of November from $23.9 billion to $24.7 billion.
"We believe this is positive for the capacity of the CBN to sustain its daily dollar sales even as the recent output deal reached by OPEC members signals further improvement. However, unresolved crisis in the Niger Delta remains a drag to accretion," Robert Omotunde, head, investment research, and his team of analysts at Afrinvest said.