CBN to further strengthen Naira, mop-up excess liquidity

As part of efforts to soak up liquidity from the banking system and support the local currency, the Central Bank of Nigeria, CBN, said it plans to sell $111.29 (N35bn) million in short dated treasury bills.

National Daily gathered that the apex bank will sell N5 billion of the 190-day open market operations (OMO) bills and 30 billion naira 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 CBN 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 apex bank mopped up around 400 billion naira from the banking system, pushing up interbank rates and leaving some banks scrambling to find cash to cover their positions.

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The CBN 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 2.36 trillion naira.

The local currency was quoted at 390 to the dollar on the black market on Wednesday, and at 381.71 per dollar at the investor window according to the market regulator FMDQ OTC Securities Exchange.

At the Bureau De Change (BDC) window, the Naira was sold at N362 to the dollar, while the pound sterling and the Euro closed at N495 and N423.

Trading at the interbank market showed that the Naira closed at N305.7, while the pound sterling and the Euro closed at N453.18 and N386.