By Ademola Alawiye

The Central Bank of Nigeria on Monday intervened in the foreign exchange market as it offered $400m for sale at the foreign exchange auction.

The CBN, 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 $400m for sale at the foreign exchange auction of March 14, 2011.”

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

The statement added, “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, rose marginally by 0.83 per cent to 9.83 per cent on the average last week from nine per cent the previous week as cash outflows to treasury bills drained liquidity from the system.

At the inter-bank market, the secured Open Buy Back was flat at 8.50 per cent, 200 basis points above the CBN’s 6.50 per cent benchmark rate and 4.5 percentage points higher than the Standing Deposit Facility rate.

Overnight placement closed at 10 per cent, up from nine per cent, while call money traded at 11 per cent, up from nine per cent last week.

The CBN sold N130bn in 91-day, 182-day and 364-day treasury bills on Thursday as part of measures to control money supply in the country. It also sold $650m at its bi-weekly foreign exchange auction.

The market opened on Friday with a balance of about N116.41bn in banks’ accounts with the CBN, but the bulk was the refund from CRR, which dealers said could not be used in major transactions.

Nigeria approved the disbursement of N413.3bn from its central accounts to its three tiers of government on Friday. Traders said half of the money should pass through banking systems and help ease liquidity.

The seven-day funds at the Nigeria Inter-Bank Offered Rate rose to 9.91 per cent from 9.66 per cent, while the 30-day closed at 11.37 per cent from 10.70 per cent.

The 60-day traded at 12.08 per cent from 11.29 per cent, while the 90-day climbed to 12.66 per cent from 12.12 per cent last week.

Source: Punch