Lagos - The Naira is poised for further losses as the interbank market adjusts to prevailing liquidity conditions.
On Tuesday, the local currency tested 287 in intraday trade forcing the central bank to intervene with a small offering of United States dollars.
Market watchers said the new currency framework allowed for periodic central bank intervention.
"But we believe that the monetary authority would be a regular participant in the interbank market, at least in the short term, to ensure that sufficient liquidity is available to facilitate two-way trade," stated Rand Merchant Bank.
Also read: Naira stabilises at N350 to Dollar
Earlier in the week, the Central Bank of Nigeria cleared almost 90 percent of outstanding US dollar demand, estimated at US$4 billion, through a combination of spot and forward US dollar sales.
“However, details regarding certain aspects of the forward transactions remain unclear, creating an air of uncertainty among interbank participants,” RMB stated on Wednesday.
The financial house said as anticipated, interest in long-dated government bonds remains muted with very little price action over the last two days.
“However, the short end of the curve has steepened dramatically as a result of non-sterilised intervention. Today (Wednesday) should prove to be another interesting day,” RMB projected.
The Naira has over the months struggled against major currencies such as the US dollar.
This is linked to the decline of prices of oil in the international markets.
The West African country is the continent’s biggest producer of crude oil.
- CAJ News