The naira was stable against the United States dollar at the Retail Dutch Auction System (RDAS) arm of the forex market yesterday as it maintained its value of N155.75 to a dollar. The CBN offered a total of $400 million while it sold $399.731 million to the 22 banks that participated in the auction.
At the interbank segment of the forex market, the nation’s currency which climbed to N166.20 to a dollar early yesterday, closed higher at N165.97 to a dollar. Dealers told Reuters that the panic observed in the market in the last two trading session was starting to subside, especially since the Central Bank of Nigeria (CBN) had shown willingness to intervene to prop up the naira.
The suspension of Sanusi Lamido Sanusi as CBN governor over allegations of financial recklessness had triggered panic across the financial markets. This also led to huge forex demand especially by offshore investors.
The currency had fallen to a record low on of N169 to a dollar last Thursday, until the central bank intervened to prop it up.
Also yesterday, yields on government debt were broadly stable, as offshore investors remained on the sidelines even as dealers said turbulence at the central bank had largely been priced in locally.
“People are still cautious,” said one currency dealer. “Offshore investors are on the sidelines, waiting for the storm to calm down before they come back again.”
For some local players, that reticence was a buying opportunity. Local pension funds bought up debt being sold off by foreign investors, with the result that the benchmark 10-year government bond yield was stable at around 13.8 percent, or about 10 basis points below Friday’s close.
Other maturities were also broadly stable.
The acting CBN Governor, Dr. Sarah Alade sought to calm the markets on Friday, pledging to maintain Sanusi’s monetary policies and keep the naira within its target band of between N150 and N160 to a dollar.
The Group Managing Director/Chief Executive Officer, Zenith Bank Plc, Mr. Godwin Emefiele has been nominated as CBN governor designate.