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Nigeria central bank springs unscheduled T-bill auction as naira weakens

Published 07/08/2019, 15:43
Updated 07/08/2019, 15:50
© Reuters. Nigeria central bank springs unscheduled T-bill auction as naira weakens

By Chijioke Ohuocha
LAGOS, Aug 7 (Reuters) - Nigeria's central bank offered 100
billion naira ($326 mln) of treasury bills on Wednesday, in its
first such auction since mid-July as it seeks to boost dollar
liquidity in the currency market after the naira fell, traders
said.
The OMO bills were offered in maturities of three, six and
12 months and result are due later in the day, they said.
"It is a surprise auction. I don't know why they are
floating it without prior announcement," one trader said. "This
one-off might not help dollar liquidity unless they become
consistent in the offering."
Pressure has been building on the naira as oil prices drop
and foreign investors book profits on local bonds in response to
falling yields.
At the central bank's last, 75 billion naira T-bill auction
on July 18, one-year paper was sold at 12.25% compared with as
high as 18% a year ago.
Forex trading was thin on Wednesday. The naira was quoted at
363.50 per dollar on Monday and Tuesday compared with 362.50 at
the end of last week as foreign investors repatriated funds,
they said.
The bank was conducting regular weekly OMO auctions until
July, when it switched focus to trying to boost economic output
following recession by telling banks to lend more or face a rise
in minimum reserve requirements. Nigeria operates a multiple exchange rate regime which it
has used to manage pressure on the currency. The official rate
of 306.90 is supported by the central bank but the traded rate
of 363.50 is the one widely quoted by foreign investors and
exporters.
($1 = 306.90 naira)

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