By Udeme Ekwere

Monday, 17 Jan 2011

The Central Bank of Nigeria said on Friday that it auctioned treasury bills worth N135.57bn last week.

This, according to the apex bank regulator was in its bid to control money supply in the system.

The regulator sold N45.84bn bills at 10.19 per cent in 364-day treasury bills, N45.40bn in 182-day bills at 9.45 per cent and N44.33bn in 91-day papers at 7.59 per cent.

Reuters reported on Friday that the CBN auctions treasury bills regularly to control money supply, curb inflation as well as to help banks manage their liquidity.

Traders said the bulk of the funds invested in the treasury bills, were rolled over from the previous issues, which matured during the week.

Reports showed that the interbank rates rose by 313 basis points from 6.29 per cent to 9.42 per cent. This was traced to the further decline of liquidity in the system which was drained by large cash withdrawals, especially by the Nigerian National Petroleum Corporation.

The naira had depreciated against the dollar at both the inter-bank market and official market on Wednesday as the CBN was unable to meet demand for the greenback at its auction.

 

The naira weakened to N153.20 to a dollar in the inter-bank market from N152.85 on Tuesday.

The apex bank for the third time this year, failed to meet all demand at its bi-weekly auction and has also depreciated the local currency at its window in all the three sessions.

CBN sold $350m at N150.01 to a dollar, as against $464m demanded, higher than the $300m sold at N149.80 to a dollar on Monday.

Last month, the CBN sold N100.98bn in treasury bills at its latest auction as part of measures to control money supply.

It sold N40bn at 10.24 per cent in 364-day treasury bills, N35.98bn in 182-day paper at 9.54 per cent and N25bn at 7.50 per cent in 91-day papers.

Yields on the papers were generally lower, compared to the last auction, with the exception of the 91-day paper, which was 10 basis points higher than the previous auction.

At the auction, the CBN sold 364-day papers at 10.25 per cent, 182-day instrument at 9.75 per cent and 91-day bills at 7.40 per cent.

The country auctions treasury bills regularly to control money supply, curb inflation and help banks manage their liquidity.

Source: Punch