Naira strengthens to 280/dollar as stocks rise by 0.4%

Statistical data from the Central Bank of Nigeria (CBN) Tuesday show that the Naira gained for the second day of trading without a peg after the CBN washed-out more than $4 billion on Mondayto clear pent-up demand for foreign currency.

Similarly, Stocks advanced and dollar-bond yields fell to 10-month lows.

The currency of Africa’s biggest economy strengthened by 0.7 percent to 280.5 per dollar, after declining as much as 1.4 percent earlier to a record 286.50.

It slumped 30 percent yesterday after the central bank abandoned its 16-month-old fix of 197-199 per dollar.

In specific terms, the CBN sold $532 million on the spot market and $3.49 billion on the forward market on Monday, according to a Lagos-based foreign-exchange trading platform FMDQ OTC Securities Exchange on its website.

Read also: Naira falls to N286/ per dollar in interbank market

While the exchange rate for the forwards wasn’t disclosed, the dollars on the spot market were sold at a rate of 280 naira per dollar, according to a person who asked not to be identified as the information isn’t public.

The benchmark indices of the Nigerian Stock Exchange (NSE) climbed 0.4 percent, paringMonday’s 1.6 percent decline.

Nestle Nigeria Plc led the advancers, gaining 5 percent, while International Breweries Plc added 4.9 percent and Axa Mansard Insurance Plc rose by 4.8 percent.

Yields on the West African country’s $500 million bond due in July 2023 dropped one basis point to 7.09 percent, having fallen 9 basis points on Monday.

According to Chapel Hill Denham Securities Ltd., an investment bank, the CBN, which has seen its reserves fall to a more than 10-year low of $26.4 billion, will struggle to keep intervening on a large scale to defend the currency,.

 

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