- Naira Closes Flat, CBN Injects $195m Into FX Market
The Central Bank of Nigeria has continued its sustenance of foreign exchange liquidity by injecting another $195m into the inter-bank foreign exchange market, even as the naira maintains its strength.
The $195m intervention was made on Monday.
Figures released by the bank showed that it offered the sum of $100m to the wholesale segment, while the Small and Medium Enterprises segment received the sum of $50m. The invisibles segment comprising tuition, medical payments and basic travel allowance received $45m.
The bank’s Acting Director, Corporate Communications, Mr. Isaac Okorafor, said on Monday that the intervention was in line with the CBN’s continual determination to ensure forex liquidity and satisfy legitimate demands.
Okorafor said the bank would continue to intervene in the nation’s forex market in order to sustain the liquidity in the market and guarantee the international value of the naira.
Meanwhile, the naira closed at 363/dollar at the parallel market on Monday, the same rate it had maintained in the past two weeks.
According to analysts, the naira is expected to remain stable across its multiple exchange rates this week as the CBN continues to intervene and maintain tight money market liquidity to lure foreign inflows to support the currency.
The local unit has been hovering at around 360/dollar at the Investors and Exporters foreign exchange window.
On the official market, the naira has been quoted at around 305 per dollar for more than three months.
The CBN is planning to sell N119.94bn Treasury bills at an auction on November 15.
The bank plans to offer N32.44bn in three-month paper, N22.82bn in six-month bills and N64.68bn of a one-year note.
Results of the auction will be announced on the same day.
In a related development, overnight lending rate fell to nine per cent on Friday, from around 21 per cent in the previous session after the CBN repaid maturing Treasury bills to boost liquidity in the money market.
The CBN has kept rates high in the economy to fight inflation and currency weakness and to attract foreign investors. It has been selling Treasury securities almost four times a week to soak up naira liquidity.
Overnight lending rates had hit 120 per cent two weeks ago after a court ordered a freeze on millions of bank accounts with incomplete identity documents, and the bank sold Treasury bills.
Traders said money market rates trended downwards after the monetary authority on Thursday repaid around N200bn worth of open market bills that matured.
It subsequently sold N80bn worth of bills which was not enough to mop up liquidity. Banking system liquidity opened for trade on Friday at N71bn in credit.
Traders expect liquidity to tighten this week as the CBN continues its treasury auctions and intervention in the currency market.