Stories by Motolani Oseni
The Nigerian currency, Naira, during the week under review sustained gained points against the Dollar, while the nation’s interbank lending rate at the close of market on Friday rose to 12 per cent from eight per cent.
Although, foreign exchange dealers explained that the development was recorded after bond and Treasury bill purchases paid for by lenders drained banking system liquidity.
However, the local currency over the weekend steadied at an appreciable of 367 per US Dollar against 368 traded during the week under review and also closed against Pound Sterling and Euro at 472 and 420 at the parallel market, respectively.
The Naira, however, remained stable at the Central Bank of Nigeria (CBN) official rate of 305.95, the same rate it has been selling since Wednesday against the opening rate of 306 last Monday.
But at the Investors and Exporters FX window, the local currency opened at a better rate of 364.39 compare to 365.34 it did during the week but closed at a slight depreciated rate of 362.83 against 362.80, however, better than 366.08 within the week under review.
The naira, at the interbank forex market sold at 324.63 per dollar and closed at 419.74 and 370.24 against Pound and Euro, respectively.
Meanwhile, Nigeria’s interbank lending rate which had rose to about 15 per cent from the 5 per cent recorded the previous, rose by just four per cent from eight to 12 per cent last week, although after commercial lenders made payment for dollar and Treasury bill purchases, thereby bringing down liquidity.
The central bank sold 25 billion naira ($82 million) worth of 363-day treasury bills on Friday, while lenders paid for bonds bought at an auction on Wednesday.
Money market rates stood at 15 per cent in the preceding week. They dropped to 8 per cent after the central bank injected 89.96 billion naira to settle matured treasury bills on Thursday.
Foreign exchange dealers anticipate that the interbank rate will climb to 20 per cent at the start of next week because of expected central bank intervention in the foreign exchange market.
The central bank has been using treasuries to mop-up liquidity from the banking system in a bid to also curb pressure on the currency.
Market liquidity opened at 28.69 billion naira deficit on Thursday, traders said, narrowing the deficit which widened to 78.29 billion on Monday.
Forex dealers said that the interbank rate traded above the 40 per cent level on Wednesday because of the Treasury bill auction. However, anticipating borrowing costs to rise next week, as the central bank is likely to continue its forex interventions to stabilize the naira.
Since February, CBN has been selling dollars in a bid to manage liquidity shortfall and reduce the gap between the official and black market exchange rates for naira.