Nigeria’s central bank offered 100 billion naira ($326 mln) of treasury bills on Wednesday, in its first such auction since mid-July as it seeks to boost dollar liquidity in the currency market after the naira fell, traders said.
The OMO bills were offered in maturities of three, six and 12 months and result are due later in the day, they said. “It is a surprise auction. I don’t know why they are floating it without prior announcement,” one trader said. “This one-off might not help dollar liquidity unless they become consistent in the offering.”
Pressure has been building on the naira as oil prices drop and foreign investors book profits on local bonds in response to falling yields. At the central bank’s last, 75 billion naira T-bill auction on July 18, one-year paper was sold at 12.25% compared with as high as 18% a year ago.
Forex trading was thin on Wednesday. The naira was quoted at 363.50 per dollar on Monday and Tuesday compared with 362.50 at the end of last week as foreign investors repatriated funds, they said. The bank was conducting regular weekly OMO auctions until July, when it switched focus to trying to boost economic output following recession by telling banks to lend more or face a rise in minimum reserve requirements.
Nigeria operates a multiple exchange rate regime which it has used to manage pressure on the currency. The official rate of 306.90 is supported by the central bank but the traded rate of 363.50 is the one widely quoted by foreign investors and exporters. Reuters
Pix: CBN Governor, Godwin Emefiele
