Naira gains as dollar supply rises by 38.81%

The foreign exchange (FX) market resumed trading after the Christmas holidays, with Nigeria’s naira strengthened against the U.S. currency on 38.81 percent increase in dollar supply on Wednesday.

The naira gained 1.50 per cent as the dollar was quoted at N872.59 on Wednesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM). This was stronger than N885.88 quoted on Friday before the festive holidays.

Data from the FMDQ showed that dollar supply increased by 38.81 percent to $127.93 million on Wednesday from $92.16 million recorded on Friday.

The dollar was supplied by willing buyers and willing sellers who participated in the FX auction at NAFEM.

They quoted the dollar at N1,235.65 on the spot trading, stronger than $1,248 quoted on Friday. For the lower spot rate, the dollar traded for N740, weaker than N700 on Friday.

At the money market, the Nigerian treasury bills secondary market closed on a mildly positive note on Wednesday, with the average yield across the curve decreasing by 1 basis point to 8.42 per cent from 8.43 per cent on the previous day, according to a report by FSDH research.

The report noted that average yields across medium-term and long-term maturities declined by 1 basis point each. However, the average yield across the short-term maturities closed flat at 3.51 percent.

According to the report, the Federal Government of Nigeria (FGN) bonds secondary market closed on a mildly positive note on Wednesday, as the average bond yield across the curve cleared lower by 7 bps to close at 14.55 percent from 14.65 percent on the previous day.

The average yields across the curve’s short tenor and long tenor decreased by 37 bps and 2 bps. However, the average yield across the medium tenor of the curve remained unchanged. The March 23, 2025 maturity bond was the best performer with a decrease in the yield of 75 bps, while the January 22, 2026 and April 26, 2029 maturity bonds were the best performers with an increase in the yield of 1 basis point each.

According to the Debt Management Office (DMO), the country’s total public debt portfolio has marginally increased to N87.91 trillion as of September 30, 2023, from N87.38 trillion as of June 30, 2023. Out of the total debt, external debt declined to N31.98 trillion as of September 30, 2023, from N33.25 trillion as of June 30, 2023, while domestic debt rose to N55.93 trillion as of September 30, 2023, from N54.13 trillion as of June 30, 2023.

“It should be noted that the external debt declined due to the redemption of a $500 million Eurobond and a payment of $413.86 million as the first principal repayment of the $3.4 billion obtained from the International Monetary Fund in 2020 during the pandemic,” the report stated.