Stocks fall for second day as Naira firms up at parallel market

Nigerian shares extended falls for the second day as sentiment started to weaken amid the possibility that index provider MSCI will downgrade Nigeria later in the year.

The main index shed 2.05 percent to 32,791 points, dragged down by its relatively liquid banking sector which fell 3.44 percent. Stocks had been gaining since May on central bank currency moves.

Banking shares have been spooked after talks between a group of lenders and telecoms firm Etisalat Nigeria over a debt renegotiation collapsed.

Wema Bank, fell 8.96 percent to lead the banking sector lower, followed by Ecobank down 8.47 percent and Diamond Bank 8.2 percent.

Meanwhile the Naira is seen trading around the prevailing level on both the black market and official interbank window as the central bank continue to inject more dollar liquidity to support the local currency.

The local currency was quoted flat at 365 to the dollar on the black market, trading at 305.85 per dollar on the official interbank window against 305.70 a dollar last week.

Against the British Pound Sterling, the local currency also stayed firm at N465 at the black market and against the European single currency, Euro, the naira exchanged at the rate of N410.

The healthy run at the forex market came as a result of the consistent intervention of the Central Bank of Nigeria, CBN, which has helped the Naira gain its footing against, the greenback, Pound and Euro.

“The market seems to have reached a comfortable floor for now, except if the CBN decides to move the band, the naira will continue to trade at the prevailing level in the near term,” Aminu Gwadabe, head of currency retailer bureaus said.

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Gwadabe said the CBN sold around $64.5 million to bureau de change operators on Tuesday and plans to sell another round of same amount on Thursday. This he said has kept the market liquid and provide some support for the naira.

At the beginning of the week, the apex bank pumped the sum of $195m into the Spot FX segment of the forex market to meet the requests of customers in the various segments of the market.

This development helped the value of the Naira at the black-market as the naira scooped gained three points to move up to N364 per Dollar from the rate of N367, which it traded for all through last week at the parallel market.

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