The Central Bank of Nigeria has said it plans to issue N70.65bn ($445.18m) in treasury bills at its regular bi-monthly debt auction next week as part of measures to tighten liquidity.

The Apex bank, which disclosed this on Wednesday, said the treasury bills would range from three-month to six-month maturities.

It said it would issue N30.65bn in 91-day paper and N40bn in 182-day bills on August 23.

The CBN issues treasury bills regularly to reduce money supply as well as curb inflation and help banks to manage their liquidity.

Meanwhile, the naira firmed to a more than three and half month high against the United States dollar on the inter-bank market and the official window on Wednesday, supported by dollar flows from offshore investors into Nigerian debt.

The naira closed at N157.25 to the dollar, a level last seen on April 25 and higher than the N158.75 it closed at the previous day.

The local currency has gained 1.84 per cent this year from N160.20 to the dollar on January 3.

The CBN sold $200m at N155.80 to the dollar, compared with $147m sold at N155.83 to the dollar at its previous auction on Monday.

Dealers said last month’s decision by the CBN to reduce banks’ Net Open Position limit to one per cent from three per cent had curbed banks’ ability to speculate on the forex market.

Reuters quoted a dealer as saying, “There were large dollar inflows from offshore investors participating at the bond auction today, which boosted dollar liquidity as many banks sold their dollar positions to stay within their net open position limit.”

The Debt Management Office offered N75bn naira ($472.59m) in local bonds with maturities of between five and 10 years at its regular auction today.

The CBN in July raised the cash reserve requirement for banks to 12 per cent from eight per cent, and reduced NOP to one per cent from three per cent, to restrict the money supply and support the currency.

The apex bank also barred banks that borrowed naira funds from its official window from using the funds to buy dollars at its by-weekly auction, a bid to crack down on currency speculation.

Traders said the naira was expected to hover around N157.50 to N158 in the coming days unless there was additional dollar inflow from oil companies.

Source: Punch