The country’s Federal Government (FG) sold N195.95bn ($975m) in Treasury bills with maturities from three months to one year in its second auction of the year on Wednesday, at higher yields than previously, the Central Bank of Nigeria said on Thursday.
The bank sold N36.78bn of three-month paper at 4.29 per cent, up from four per cent at a sale on January 6, according to Reuters.
It also sold 39.17 billion naira of six-month debt at 7.59 per cent against 6.99 per cent, and N120bn of one-year paper at 9.32 per cent compared with 8.05 per cent.
The rand clawed back some ground against the dollar on Thursday, helped by an upswing in global market sentiment, but remained vulnerable due to the dim economic outlook for South Africa.
Stocks ended near a two-year low in volatile trade, with MTN Group leading the decline on the local bourse over concerns raised by claims that it owed unpaid taxes in Cameroon.
The rand rallied to a session high of 16.5700, up more than one per cent on the day, and was trading at 16.6000 by 1545 GMT, a 0.9 per cent gain over Wednesday’s New York close.
The rand is however still down more than seven per cent since the start of the year, dragged down mainly by concerns about the impact of a slowdown in commodity consumer China. The currency has fallen steeply since President Jacob Zuma unnerved investors by firing the finance minister last month.
“With this weight of downbeat sentiment it would take a brave decision to position to the short side in dollar/rand,” IGM analyst Christopher Shiells said.
“At least, we see little room for a rand recovery in 2016, but we would wait until after the February budget before extending our upside target beyond 17.0000.”
South Africa’s credit rating would be downgraded if further policy mistakes such as the cabinet reshuffle were made and economic growth continued to disappoint, the regional head of Standard & Poor’s said.
In fixed income, FG bonds weakened across the board, ahead of next week’s rate decision on January 28.