Nigeria’s Central Bank sold N53.08 billion ($266.6 million) worth of treasury bills on Tuesday in a bid to mop up excess liquidity. This naira weakened against the dollar on the parallel market to N224.5 to the dollar from N223 to a dollar the previous day.
The weakening of the local currency, according to dealers, was traceable to strong demand from importers stocking up ahead of forthcoming Christmas sales.
The naira traded at 197 naira to the dollar on the official interbank market, unchanged since February.
Meanwhile, the CBN issued the 275-day Open Market Operations (OMO) bills at 13.50 per cent. The interbank lending rate traded at 6 per cent for overnight placement, almost unchanged from Monday’s 5.83 per cent.
The interbank market almost froze two weeks ago after authorities ordered banks to transfer all government revenues to its Treasury Single Account (TSA) with the Central Bank, part of an anti-corruption campaign.
To ease liquidity shortages, the Central Bank cut banks’ cash reserve ratio to 25 per cent last week.
A currency dealer said: “The market is active now because of higher liquidity from budget allocations and repaid matured treasury bills.
“We are seeing a renewed pressure on the naira from some importers stocking ahead for the coming Christmas sales and some people converting their naira to dollar.”
Nigerian importers have struggled to obtain dollars as the central bank has limited imports to offset a collapse in oil revenues, the economic lifeline of Africa’s most populous country and biggest energy producer.
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