The naira appreciated by 400 kobo to N169 per dollar at the parallel market last week, even as the Central Bank of Nigeria (CBN) sold $749.84 million through the Retail Dutch Auction System (RDAS).
Vanguard investigation however revealed that the parallel market exchange rate dropped to N169 per dollar due to weak demand for foreign exchange. “There is no business, everywhere is dull, nothing is happening”, Harrison Owoh, of H.J Trust Bureaux De Change told Financial Vanguard.
It was however a different story for the naira at the official and interbank foreign exchanges markets. At the official market, the naira depreciated by two kobo, while it lost 70 kobo at the interbank market. From N155.7 per dollar, the official exchange rate rose to N155.72 at the first official dollar sale, via the RDAS on Monday.
The interbank exchange rate rose from N159.79 per dollar on January 3rd, to N159.49 at the close of business on Friday.
These depreciations were in spite of $749.84 million sold by the CBN during the week. Data from the CBN showed that the apex bank sold $399.98 million on Monday and $349.86 million on Wednesday.
Last year, the apex bank sold $25.37 billion, up by 32.9 per cent from $19.1 billion sold in 2012. From $3.88 billion in the first quarter, foreign exchange sale rose by 70 per cent to $6.62 billion. In the third quarter, it rose again by 22 per cent to $8.09 billion.
Meanwhile, the nation’s external reserved continued its downward slide last week, declining by $321 million to $43.29 billion from $43.6111 billion at the end of 2013. In 2013 Last year, the external reserves rose from $45.98 billion in January to a peak of $48.85 billion before falling steadily to $43.61 in December.
In the interbank money market, where banks lend to each other, cost of funds fell due to huge idle cash in the market. Data from Financial Market Dealers Quote show that cost of overnight lending fell by eight basis points to 10.46 per cent to 10.54 per cent, while cost of Open Buy Back (OBB) or secured lending fell by 10 basis points to 10.23 per cent from 10.33 per cent.
Vanguard investigation revealed that interbank market opened with liquidity of N608.46 billion on Monday and closed with N532.645 billion on Friday.
Reflecting the huge liquidity in the market, trading in government securities (treasury bills) recorded 130 per cent oversubscription. The CBN offered N300.41 billion, total public subscription stood at N690.46 billion, whileN472.78 billion was allotted.