Don't Miss


Home   >   Market - Finance   >   Finance   >   CBN offers $300m at forex auction

CBN offers $300m at forex auction

By on April 14, 2011

The Central Bank of Nigeria on Wednesday intervened in the foreign exchange market as it offered $300m for sale at the foreign exchange auction.

The Central Bank of Nigeria in a statement on its website, said, “Further to our circular Ref. FMD/FED/CIR/GEN/01/082/10 of December, 29 2010, the CBN hereby intervenes with an offer of $300m for sale at the foreign exchange auction of April 13,2011.”

The statement added that authorised dealers were invited to submit their bid requests for Wholesale Dutch Auction System through Reuters dealing 3000 xtra to the CBN Abuja.

It said, “Also at WDAS –Forward, the CBN invites bids for one month tenor maturing 16/05/2011, two month tenor maturing 14/6/2011 and three month tenor maturing 14/7/2011. Bids for WDAS-FWD should be submitted between 2pm and 3pm.”

The statement further said, “The dealers are also reminded that their current accounts with the CBN must be adequately funded on the day of bidding and the accounts should remain funded at the time of disbursement, failing which the bids will be disqualified.”

Inter-bank lending rates, however, inched up to 11.25 per cent on average this week from 10.58 per cent last week as large cash withdrawals by the Nigerian National Petroleum Corporation drained liquidity from the system.

Rates were expected to hover around 11.50 per cent on average this week because of the anticipated injection of March budgetary allocations to the tiers of government last Friday.

The Secured Open Buy Back was unchanged from the previous week at 9.50 per cent, 200 basis points above the CBN’s 7.50 per cent benchmark rate and 4.5 percentage points higher than the Standing Deposit Facility rate.

Overnight placement rose to 12.0 per cent from 11.0 per cent, and call money to 12.25 per cent against 11.25 per cent recorded the previous week.

Reuters had quoted a dealer as saying, “The market reacted to the huge cash withdrawal by the NNPC this week, which left the system in deficit of about N4.8bn ($30m). We expect rates to inch up slightly or remain around 11.5 per cent on average until there are significant inflows into the system.”

The energy company usually sells dollars each month and recalls the Naira proceeds to its account with the CBN. It recalled over N150bn from the system last week.

Traders said outflows to foreign exchange purchases also helped depress liquidity in the system, outweighing disbursals from oil savings to government agencies and payments for maturing treasury bills.

Source : Punch