Naira and Dollar notes
Obinna Chima
The naira slipped against the United States dollar at both the interbank and Wholesale Dutch Auction System (WDAS) yesterday as a result of strong demand for the greenback.
The naira slipped against the United States dollar at both the interbank and Wholesale Dutch Auction System (WDAS) yesterday as a result of strong demand for the greenback.
In fact, in spite of the decision by the Central Bank of Nigeria (CBN) to increase dollar supply to $150 million at its regulated bi-weekly auction, the local currency fell slightly by one kobo to close at N155.75 to a dollar, compared to the N155.74 to a dollar it stood at the end of last Wednesday’s auction. A total 19 banks participated in the auction.
The central bank had offered a total of $120 million at the previous auction held last Wednesday.
On the other hand, at the interbank market, the value of the naira also dipped slightly yesterday by 11 kobo to close at N157.49 to a dollar, from the N157.38 to a dollar it closed last Friday.
Notwithstanding the decline, the local currency is still comfortably within the apex bank’s band of + or – three per cent of N155/$1.
Meanwhile, analysts at Renaissance Capital (RenCap) yesterday urged investors to take advantage of the opportunities in Nigeria and other African countries.
According to the firm, among the many fundamental reasons to invest in Africa’s equity and debt markets are the continent’s positive structural demographic dividend; rapid urbanisation; improving political stability; commodity wealth; the broadening of its economies beyond commodities; improving regional integration; positive macroeconomic settings and the deepening of its financial markets.
It explained: “The diversification benefits of Africa’s relatively low (and often negative) correlation with developed and emerging markets (EM), the attractive relative valuations of African equities and debt, and the relatively poor implied risk-return opportunities in developed markets (DM) are additional rationales for investing in Africa’s financial markets, in our view.
“Furthermore, African policy-makers are determined to drastically improve the tradability of their equity markets. Direct sub-Saharan Africa equity exposure also benefits from the domestic support provided by large pension funds in Nigeria and Kenya,” RenCap added.
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