The naira depreciated against
The development also saw financial markets reeling.
Sanusi was suspended over allegations of financial recklessness by the federal government. However, the Deputy Governor in charge of Economic Policy, Dr.
But as a result of the development, the naira slumped against the US dollar in most segments of the forex market despite the central bank's intervention last Thursday.
The CBN intervened by temporarily shutting down the interbank market on grounds of sudden spike in the exchange rate while also selling dollar directly to banks.
At its regulated Retail Dutch Auction System (RDAS), the central bank offered a total of
However, the naira maintained its value at the RDAS as it closed at N155.75 to a dollar. The nation's currency also weakened at the Bureau De Change (BDC) segment by N1 as it closed at N170 to a dollar while it fell by N1 to close at N171.50 to a dollar at the parallel market.
According to a report by
The report revealed that trading at the forex market was choppy while quotes were few and far between.
"Sensing market over-reaction, the CBN sold foreign exchange to banks. This intervention, however, could not calm the market as strong demand persisted," it explained.
But currency analysts at
"We expect the interim governor to carry on with the current foreign exchange policies. Consequently, we anticipate relative stability of the naira as the new management continues its intervention to management interim systemic shock triggered by the suspension of Sanusi," it added.
In addition, the Cowry Asset report stated that though not being very vocal on his market philosophy and orientation, it anticipates that Emefiele would adopt a dovish approach on monetary policy as against Sanusi's hawkish style.
Bond Market The bond market opened last Friday after Thursday's shutdown due to change in leadership at the CBN, with levels seen above 14 per cent.
The RenCap report showed that the market initially flashed quotes around 14.30/14.20 per cent and 14.25/14.09 on JAN 22s and APR 17s, while a bit of interest was seen with prices appreciating.
Yields also moderated to JAN 22s:14.20/14.09 per cent; APR 17s: 14.21/14.01 per cent before noon. Some significant demands for the long dated bonds were observed towards market close and yields adjusted further downwards.
"Closing figures: 2022s:13.94%/13.88%; 2019: 13.99%/13.96%; 2017s: 13.96%/13.07%; and 2015: 14.00%/13.84%," it added.
It added: "This development is likely to lead to an increase in the country's risk premium, thus requiring a re-pricing of yields to incentivise investors. This increase will undoubtedly raise the governments cost of borrowing, exacerbating re-current expenditure (over 65 per cent in 2014)."
NIBOR The interbank market witnessed moderation in interest rates for all tenors as treasury bills worth N345.95 billion matured last Thursday.
Also, N629.12 billion from Federation Accounts Allocation Committee (FAAC) distributed among the three tiers of government about a fortnight ago hit the financial system last week and helped to boost financial system liquidity.
The inflows into the system more than offset the outflows via auctioned treasury bills worth N130.65 billion as well as withdrawals of about N141.22 billion to fund forex demand at the RDAS.
Consequently, interbank rates reduced. Specifically, while the Call tenor closed at 11.08 per cent on Friday, as against the 13.71 per cent it stood the preceding Friday, the 7-day tenor also dropped to 11.45 per cent, from 13.87 per cent. In the same vein, just as the 30-day tenor reduced to 11.71 per cent on Friday, from 14.12 per cent the preceding Friday, the 60-day tenor also fell to 12.04 per cent. The 90-day, 180-day and 365-day tenors all closed lower at 12.29 per cent, 12.54 per cent and 12.87 per cent respectively.
The RenCap report noted that the treasury bills market witnessed sporadic trading and wide swings in yields that hit 14 per cent at some point on Friday.
"Not so sure of market direction, most dealers jumped off, with market fizzling out by noon instead of
It showed that the 91-day treasury bills closed at 13.30/13.05 per cent; 182-day at 13.20/12.95 per cent; and 365-day at 12.90/12.65 per cent.
According to the report, demand at the primary market "has been weak these days due to higher yields in the secondary market. It was therefore no surprise that CBN cancelled today's (Friday) Open Market Operation (OMO) auction due to lack of demand."
It added: "CBN's determination to stabilise naira remains strong but the market is still skeptical about the depth of its fire-power. Consequently demand for forex remains strong.
"Local fund managers have been lifting juicy offers in the bond market, especially around 14 per cent levels, with trend also expected to continue.
"There is no doubt that this is the best time to build greenfield equity and fixed income portfolios in
Currency Devaluation Alade last Friday assured that the apex bank had no immediate plans to devalue the currency. She also reaffirmed the CBN's commitment to continually intervene in the interbank foreign exchange market to ensure the stability and preservation of the naira.
Speaking to journalists for the first time since assuming office as CBN acting governor, she reassured stakeholders, including the international community that the recent changes at the apex bank would not in any way affect its monetary policy stance and pursuit of maintaining price and financial system stability.
She said the bank would continue to carry out its responsibilities by reacting appropriately to emerging challenges and upholding the trust bestowed on it. She described the recent distortion in exchange rate market as a temporary and expected reaction to the suspension of Sanusi.
CBN's Independence The independence of the CBN will not be destroyed under the leadership of President
"There is no threat to the economy or to monetary policy by changes announced.
He also assured that the change of leadership in the apex bank would not negatively impact on the economy and banking sector.
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