Naira recovery may have begun with last week’s strong performance against the dollar. It gained N12 against the dollar.
Prior to the election on March 28, the naira exchanged for about N225 to the dollar. But after the victory of the All Progressives Congress (APC) presidential candidate, Muhammadu Buhari, it firmed 0.46 per cent on April 1 to N217 per dollar on the parallel market.
By April 2, the naira closed stronger at N215 per dollar. By April 3, it further strengthened at N210. On April 7, it closed flat at N200.
Dealers attributed the steady recovery on the black market to politicians who sold off their dollar holdings when their fears of violence and instability did not materialise.
Most politicians who reportedly stockpiled dollars before the federal elections swooped on their domiciliary accounts to sell as much as possible.
Dealers across parallel markets said they had seen little demand for dollar compared with the trend before the polls.
However, dollar supply from politicians seemed to have dried up. By April 8, supply started to rear up again, stoking a sharp decline in the dollar to naira exchange rate.
A dealer at the Trade Fair Complex, Mile 2 – Badagry Express way, Lagos said the naira depreciated to N210 to dollar.
The interbank rate remained stable at N199 a little above N197 to the dollar, a level it had traded at since February, after the Central Bank of Nigeria (CBN) pegged the rate following another devaluation.
Also in the fixed income market, yields trended southwards as risk element associated with politics gives way to a positive mood and expected rise in participation in the coming naira auctions.
Since the auction on March 25, yields on T-bills instruments were dropping across tenors by an average1.42 per cent, with 1M tenor witnessing the most marked decline of 4.17 per cent.
A good amount of demand was also witnessed on longer termed instruments, as 12M tenor declined 1.16 per cent.
On April 8, investor sentiments in the T-bills market remained largely bearish as 2M and 3M bills were the only tenors to record declines in yields.
Average yield change for the day was +0.09 per cent, as 1M, 6M, 9M, and 12M bills settled at 10.85 per cent (+0.53 per cent), 14.67 per cent (+0.05 per cent), 15.15 per cent (0.00 per cent), and 15.52 per cent (+0.06 per cent).
