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#Nigeria Naira Stable on Forex Inflow

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Naira notes

 

By Obinna Chima

The naira was stable on both the Central Bank of Nigeria’s (CBN)-regulated Wholesale Dutch Auction System (WDAS) and interbank market Wednesday due to inflow of the greenback into the system.

Similarly, the behaviour exhibited by the local currency yesterday was also attributed to an increase in the supply of the dollar by the CBN at the bi-weekly auction.

In fact, at the first WDAS session for May held yesterday, the naira closed at N155.69 to a dollar, the same amount it was at the end of Monday’s auction.

The CBN offered a total of $150 million to the 15 banks that participated in the auction. This represented an increase by 25 per cent, over the $120 million it had offered to 19 banks on Monday.

On the other hand, the local currency maintained its position at the interbank as it closed at N157.40 to a dollar, the same value it was on Monday.

The market did not open on Tuesday, due to the public holiday that was declared to commemorate the workers’ day.

Dealers said the liquidity position of the market was influenced by the sale of about $194 million to banks by two multinational oil companies. The companies were identified as Mobil and Agip.

Meanwhile, the CBN yesterday disclosed plans to auction treasury bills worth N145.05 billion next week Thursday. The bills would range between 3-month to 1-year maturities at its bi-monthly auction. Specifically, the apex bank said it would issue N32.05 billion in 91-day bills, N53 billion in 182-day bills and N60 billion in 364-day bills.

The CBN issues treasury bills regularly to tame inflationary pressure, to ensure that it reduces the volume of money supply in the economy, amongst others.

The CBN had auctioned treasury bills worth about N141 billion at the previous auction. It had sold 91-day paper, 182-day bills and 364-day bills. Yields at the previous auction fell across various tenors. This was then, driven by strong demand from offshore and local institutional investors.
“We expect the CBN to maintain tight monetary conditions and mop up excess liquidity. This means the CBN will not reduce treasury bills or Open Market Operation (OMO) rates as long as there is no turnaround in the fiscal path,” a source said.

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