CBN To Mop-up Liquidity In Support Of Naira

The Central Bank of Nigeria (CBN) plans to sell N35 billion ($111.29 million) in short-dated treasury bills as part of efforts to soak up liquidity from the banking system and support the local currency, traders said on Wednesday.
The bank will sell 5 billion naira of the 190-day open market operations (OMO) bills and N30 billion of 330-day paper, according to a notice cited by currency traders.
Sales of treasury bills support the currency by draining cash from the market, curbing speculative demand for foreign exchange.
After introducing a multiple exchange rate system, the regulator has been intervening since February to prop up the naira, a victim of a sharp fall in the oil price and Nigeria’s first recession since 1991.
Last week, the central bank mopped up around N400 billion from the banking system, pushing up interbank rates and leaving some banks scrambling to find cash to cover their positions.
The bank will also auction 140 billion naira in bonds on behalf of the debt management office on Wednesday as part of measures to fund part of this year’s budget deficit, estimated at around N2.36 trillion.
The local currency was quoted at N390 to the dollar on the black market on Wednesday, and at N381.71 per dollar at the investor window according to the market regulator FMDQ OTC Securities Exchange. Commercial lenders had yet to put up a price on the interbank window.
© Reuters News

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