The Nigerian naira is seen flat at about 361 per dollar next week as investors weigh the impact of monetary tightening in United States against expected returns from holding local treasuries, traders said.
Trades were thin at midday on Thursday, with demand for dollars but little supply. The naira last traded at 361.50.
It was quoted at 305.90 on the official interbank market on Thursday, supported by the central bank’s regular interventions.
Wednesday’s U.S. rate rise could trigger a sell-off in the local market as offshore investors exit naira assets. The Nigerian debt office’s latest treasury auction increased yields slightly to draw demand.
As Nigeria’s National Bureau of Statistics (NBS), on Wednesday, released the Consumer Price Index (CPI) for May 2018. The CPI measures the average change over time in prices of goods and services consumed by people for day-to-day living.
The report shows inflation increased by 11.6% (year-on-year) in May 2018 which is 0.87% less than the recorded rate in April, 2018 (12.48%). This reduction is the sixteenth consecutive time inflation rate has been dropping since January, 2017.
Meanwhile latest data from the CBN also indicates that the spate of the rising forex reserves recorded in the last few weeks has reduced with the CBN dipping its hands to fund a potential liquidity in the market.
Nigeria’s external reserves has since dipped from about $47.9 billion to about $47.4 billion.