Naira remains firm, as Christmas approaches

At the foreign exchange auction held on Monday, December 14, 2009, the CBN offered $200 million, compared to the $300 million it offered in the previous week, while it sold a total of $200,000 million, compared to a total of $237 million it sold in the previous week. The sale was 9.56 per cent lower than what it offered.

On Wednesday, December 16, 2009, the CBN offered $300 million, compared to the $200 million it offered in the previous week, while it sold a total of $300,000 million, compared to a total of $200mn it sold in the previous week. The sale was 9.56 per cent higher than what was offered.

Last week, interbank lending rates jumped to 10.8 per cent on average recently from 2.5 per cent previously after large cash outflows for foreign exchange and Treasury bill purchases.

The Open Buy Back (OBB) raised to 8.0 per cent from 2.5 per cent the previous week, 200 basis points higher than the Central Bank of Nigeria’s 6.0 per cent benchmark interest rate.

Overnight placement closed at 11.5 per cent, up from 2.5 per cent, while call traded at 13 per cent against 2.5 per cent recently.

Traders said that lending rates were expected to ease this week when another round of budgetary allocations would be made to the three tiers of government.

Last month, a total of $500 million was offered, while the CBN sold $399.32 million, compared to $500 million. The sale was 20.14 per cent lower than what it offered.

Consequently, the value of the naira appreciated at the inter-bank and official markets of the foreign exchange market for the month , while it remained stable at the parallel market.

Also the official market, the value of the naira appreciated by 36 kobo to close at N149.75/$1, compared to the figure of N150.11/$1 during the period in review.

However, the value of the naira remained stable at the parallel market to close at N153/$1, same as the last week’s figure.

It would be recalled that at this same period last year the naira experienced series of depressions which the then Central Bank Governor Chukwuma Soludo, said was a deliberate policy by the apex bank to stabilise the foreign exchange market and the national economy.