The Central Bank of Nigeria has auctioned a total of N184bn worth of Treasury bills in two consecutive days. The CBN, upon resumption from the Sallah break on Wednesday, conducted a Primary Market Auction, rolling over maturing T-bills worth N34.4bn across 91-day, 182-day and 364-day tenors.
On the 91-day, N4.38bn was offered at 9.70 per cent. A total subscription of N15.06bn was recorded while N4.38bn worth of bills was sold. The N10bn 182-day tenor bill, which was offered at 11.35 per cent, recorded a total subscription of N8.59bn while N3bn was sold.
A total of N27bn was recorded from the sale of the N20bn 364-day bill, which was offered at 12 per cent and recorded a total subscription of 122.88bn. Analysts at Zedcrest Capital had said they expected the rates in the market to remain elevated this week, due to expected funding pressures from a likely wholesale and retail foreign exchange interventions by the Central Bank of Nigeria.
Reuters reported that the apex bank auctioned T-bills on Wednesday at higher rates to try to lure foreign investors, hours after it was announced that President Muhammadu Buhari told the CBN to ban access to dollars for food imports.
The CBN auctioned another N150bn ($489.5m) open market bills on Thursday, making it its second bill sale in a week as the country seeks to attract more foreign investors, traders told Reuters. The CBN, last month, shifted policy to try to force banks to lend to help revive an economy stuck with low growth after a recent recession. But with falling oil prices and foreign investors taking profits, the Naira is regaining focus.
Traders said the CBN sold bills with maturities from 84-day to 350-day after it auctioned N34.4bn T-bills on Wednesday at higher rates and N100bn last week. According to Reuters, pressure has been building on the naira currency as oil prices drop and foreign investors book profits on local bonds in response to yields, which have fallen from as high as 18 per cent a year ago.
In a further sign of pressure on the currency, President Buhari told the CBN on Tuesday to stop providing funding for food imports, his spokesman said. The Naira was quoted at N364 on Thursday on thin liquidity, traders said, a level where it has traded this week.
It eased to N364/$ on Friday, from a quote of N363.50 as falling oil prices tightened liquidity on the currency market. A Dollar shortage was initially caused by a slowdown of foreign inflows after local debt market yields declined.
Nigeria operates a multiple exchange rate regime that it has used to manage pressure on the currency. The official rate of N306.90 is supported by the CBN but the traded rate of N364 is widely quoted by foreign investors and exporters.