Naira strengthens to 305.95/$1 CBN’s rate, 368 unofficial rates

The Naira on Wednesday, strengthened to 305.95 to a dollar at a Central Bank of Nigeria (CBN’s) rate, which stood at 306 on Tuesday, but remained stable at 368 per dollar at the unofficial foreign exchange market.

This is even as the Central Bank of Nigeria (CBN) on behalf of the Federal Government set to issue N204.95 billion in treasury bills at an auction on July 19.

But the local currency, at the end of yesterday’s trading at the parallel market, remained unchanged against the two major currencies Pound Sterling and Euro at 470 and 418, respectively.

The naira, at the Investors and Exporters Foreign Exchange window, opened at 365.16 compare to 366.08 that it did the previous day and closed at a depreciate rate of 366.25 against Tuesday 361.86 rate.

Indications, however, rife that the Investors & Exporters FX window has traded not less than $3.83billion since it was established on April 24.

The window, where buyers and sellers are free to agree an exchange rate, was introduced by the CBN in April to try to attract foreign investors into the country and boost the supply of dollars.

Traders said $407m were traded last week compared with $354.8m in the previous week, indicating a gradual return in investors’ confidence to the forex market.

The apex bank, had on Monday, injected $142.5 million into the forex market, which was just few days after intervening in the retail segment of the market with 254.3 million dollars, making total sum of $396.8 million.

The bank aims to raise 36.78 billion naira in three-month bills, 39.17 billion naira in six-month paper and 129 billion naira in one-year bills.

Nigeria’s central bank issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

Africa’s biggest economy expects its budget deficit to hit 2.36 trillion naira this year, as it tries to spend its way out of recession, with more than half the deficit financed through local borrowing.

Finance Minister, Kemi Adeosun, on Tuesday, said that Nigeria should not borrow more to fund its budget and instead raise the money it needs by other means.