Nigeria’s external reserves, which have plummeted for about two months, pared some of the losses in recent weeks when they rose by $595 million in just five days to $26.196 billion Monday.
The marginal accretion represented an increase of 2.26 per cent, compared with $25.601 billion as of August 24.
The development was attributed to the inflow of funds into the country’s fixed income market. It was reported yesterday that there had been renewed interest by both foreign and local investors in the fixed income market given the attractive yields.
This was largely buoyed by a single $270 million transaction at N345 per dollar by Citibank Nigeria which bought 11-months treasury bills on behalf of offshore investors.
But other transactions were carried out at between N314.50 to N317.34 to the dollar.
The FX market registered $327 million worth of trades yesterday, about six times more than its usual volume, the Chief Executive Officer of FMDQ OTC Securities Exchange, Mr. Bola Onadele, disclosed.
Average trading is around $50 million a day on normal days, but might reach $100 million on days the Central Bank of Nigeria (CBN) intervenes in the currency market.
Traders told Reuters that the central bank sold an undisclosed amount of dollars close to the end of market session, to help prop up the naira.
Yesterday’s surge in trading came after the central bank said on Friday that it planned to offer N212.85 billion treasury bills maturing between 91-days and 1-year this week.
The central bank said it would sell N45.85 billion worth of the 91-day bills, N62 billion of the 182-day paper and N105 billion of the 1-year debt. Payment for the purchase will be effected on Thursday.
The CBN has been selling short-dated open market bills at yields as high as 18 per cent in an effort to attract offshore funds, most of whom fled Nigeria’s bond and equity markets during a financial crisis that began when oil prices plunged.
The crisis ultimately led the central bank to let the naira’s value float in June.
Yet, despite the intervention by the banking sector regulator, the spot rate of the naira fell to N318.83 to the dollar on the interbank forex market yesterday, down from the N314.95 last Friday.
On the parallel market, the naira also fell to N413 to the dollar Monday, down from the N412 to the dollar last Friday.
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