CBN in desperate move to streamline dollar exchange rates

• Naira remains stable at interbank market
• Intervenes with $389m

By Odunewu Segun

The Central Bank of Nigeria last week sustained its Treasury Bills (T-Bills) offering from Wednesday till the weekend, at yields above inflation supplementing a run of dollars sales in a two-pronged effort to support the Naira.

Financial experts described the moves as an aggressive liquidity mop-up aimed at fighting inflation and dollar speculations.

One of the traders who spoke with National Daily said banks were visibly looking for cash to back up their transactions at both ends-foreign exchange market and domestic debt market. “Some even went to the CBN’s discount window to borrow money, even as Overnight interbank lending instrument hit 53 per cent,” the trader said.

At the weekend, the apex bank sold N18.88 billion in one-year treasury notes at 18.6 per cent, a premium to yearly inflation at 17.26 per cent in March, after it had earlier issued N200 billion in bills on Thursday, and N230.60 billion on Wednesday.

Although these T-Bills are more of rollover over debts at maturity, there are usually increments. Which form new deals in efforts to raise funds for government and moderate money in circulation as a foil to speculative attack on the naira and inflationary pressure.

ALSO SEE: Manufacturers laud CBN’s forex intervention efforts

Similarly, the nation’s foreign exchange reserves finally touched $31 billion, after a gradual but persistent add-ons in eight weeks, despite series of interventions and policy reforms in the sector.

Since late February 2017, when the regulator renewed its reform of the sector, which currently has significantly revived the fortunes of the local currency, an estimated $4.4 billion has been put into several interventions, although not all has matured.

The Naira at the weekend, remained stable at the interbank market at N305.80 per dollar, while at the parallel market, the exchange rate remained at N391 per dollar in all trading sessions last week.

On Friday, CBN sold $388.66 million to authorised dealers, made up of $87.885 million for spot sales, while $300.8 million went to the forwards market mainly targeted at manufacturers and other real sector operators.

Acting Director, Corporate Communications Department, CBN, Isaac Okorafor, who confirmed the development, said the forwards market intervention was split into three tenors of $100.95 for 30-day; $110.48 million for 45-day; and $99.37 million for 60 days.

The bank’s spokesman the institution remained resolute in ensuring that it supplies enough forex to genuine customers, sustain liquidity in the market and expressed hope that the CBN will inch even much closer to its objective of convergence of the rates in the interbank and BDC segments.