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The naira is expected to firm further on the back of expected influx of United States dollars from foreign investors aiming to stake funds in the N70 billion FGN bond auction tomorrow.
The Debt Management Office (DMO) is expected to issue two N35 billion 10-year bonds tomorrow. The two issues will amount to N70 billion worth of bonds.
Analysts say foreign investors are interested in Nigeria’s bonds because the yield or interest is relatively higher, compare to return on investment in Europe or America.
The naira firmed marginally against the dollar on the interbank yesterday, spurred by dollar sales by a unit of Royal Dutch Shell and declining demand for foreign exchange at the official window, traders said.
The local currency closed at N157.60 to the dollar on the interbank market, stronger than the N157.65 it closed on Friday.
Traders said the market reacted to the dollar inflows from Shell petroleum and signs of declining demand at the official window where the central bank sold less dollars than it initially offered for the third consecutive time in a row.
The central bank sold $138.70 million at N155.90 to the dollar, compared with $113.53 million sold at N155.90 to the dollar at the last auction on Wednesday. The regulator had initially offered $150 million at the bi-weekly forex auction.
Traders said more importers now buy dollars at the interbank because of the improved liquidity in the market and short turn-around time for transactions.
"We hope to see the naira appreciating further after the confirmation of the winning bids for the Shell petroleum dollar," one dealer said.
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