CBN resumes Forex sales to banks, to sell N1trn Treasury Bills in 3 months

Isola Moses | ConsumerConnect

After several weeks of absence from the foreign exchange (Forex) market, the Central Bank of Nigeria (CBN) has resumed the sale of foreign exchange (Forex) to banks in order to clear the backlog of unmet demand said to be in excess of $1.5 billion.

The CBN has scheduled Treasury Bills sales worth N1.06 trillion with effect from next week to end of 2020.

Treasury Bills are short term (less than one year) debt instruments used by the CBN to borrow money from the public on behalf of the federal government.

The CBN also uses TBs to control money supply in the economy.
The Bankers’ Bank latest TB Issue schedule shows that the programme commences on September 10, and ends on November 26, 2020, reports Vanguard.

The apex bank will issue TBs worth N95.3 billion on 91 days tenor, N113.4 billion on 182 days and N709.9 billion on 364 days during the period.

Analysis of the programme indicated that in September, the CBN plans to sell N287.32 billion worth of TBs.

This comprises N6.91 billion worth of 91 days bills, N22.4 billion worth of 182 bills, and N258.01 billion worth of 364 bills, report said.

In October, the Bank also plans to sell N353.24 billion worth of TBs.
This consists of N48.7 billion worth of 91 days bills, N31.72 billion worth of 182 days’ bills, and N272.82 billion worth of 364 days’ bills.

In November, CBN plans to sell N278.5 billion worth of TBs.

This also comprises N40.2 billion worth of 91 days’ bills, N59.3 billion worth of 182 bills, and N179 billion worth of 384 days’ bills.

It was learnt that the CBN earlier had intervened in the investors and exporters (I&E) window of the Forex market, causing the Naira to appreciate significantly from N480/$ to N420/$.

Market sources said the interventions would continue until the backlog is cleared, according to report.

The Naira was quoted at N435 per Dollar in the parallel market Thursday, after it gained almost 10% on Tuesday.

It traded at N386.48 on the over-the-counter spot market.

The apex bank sold around $50 million to foreign investors on the spot and forward markets this week in a test trade to gauge the level of demand.

The apex bank said it would resume sales to retail currency operators next week.

In order to stimulate Forex liquidity, the CBN was said to have been intervening in the I&E window.

On Tuesday, it sold $5 million, besides selling the same amount on the window Thursday, added the report.

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