The Central Bank of Nigeria on Monday intervened in the foreign exchange market, offering $200m 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 $250m for sale at the foreign exchange auction of January 30, 2012.”

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

It 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.”

According to the statement, the CBN sold $250m at a marginal rate of N157.05. It, however, refused to give information on the amount demanded by dealers. But traders said demand for the dollar hovered around $306m at the official window.

The highest bid rate, according to the CBN, is N157.21, while the lowest bid is N157. The number of participating banks at the forex auction was 24, while the successful banks were 18.

Meanwhile, the naira eased against the United States dollar at the inter-bank market on strong dollar demand from importers. The naira closed at N161.35 to the dollar at the inter-bank market, weakening from Friday’s closing level of N160.90.

Reuters quoted a dealer as saying, “Demand for the dollar has been rising fast relative to supply, causing the naira to depreciate. The naira could trade above N162 to the dollar in the coming days if we don’t see significant dollar sales by oil multinationals.”

Dollar sales by the Nigerian National Petroleum Corporation and some multinational oil companies have amounted to more than $900m in the last two weeks, helping the naira strengthen to a three-week high last week.

Inter-bank lending rates were up on Friday to an average of 15.50 per cent, compared with 14.25 per cent last week, as a delay in releasing the December budgetary allocation to government agencies starved the system of funds.

A dealer had said last week, “We are still expecting the payment of budget allocations to government agencies, so the system is short of funds. That is why rates are going up.”

CBN sold about $500m to banks at its bi-weekly auction last week, while the Debt Management Office auctioned N89.76bn worth of 10-year bonds and N138bn in 91-day and 182-day treasury bills.

Source: Punch/Ademola Alawiye