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UPDATE 1-Nigeria central bank springs unscheduled T-bill auction as naira weakens

Published 07/08/2019, 16:26
Updated 07/08/2019, 16:30
© Reuters. UPDATE 1-Nigeria central bank springs unscheduled T-bill auction as naira weakens

(Adds auction result)
By Chijioke Ohuocha
LAGOS, Aug 7 (Reuters) - Nigeria's central bank sold a total
of 114.6 billion naira ($375 mln) worth 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 bank offered to sell 100 billion naira of bills in
maturities of three, six and 12 months but got bids of 454.9
billion naira, with the one-year paper winning around 80% of the
demand.
"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.
The bank sold the most-liquid one-year bill at 12% on
Wednesday, lower than the 12.25% it paid at its last auction in
July and compared with as high as 18% it fetched 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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