ABUJA (Sundiata Post) – Nigeria’s external reserves have risen by $595 million in the past five days to stand at $26.196bn on Monday. The marginal accrual represented an increase of 2.26 per cent, compared with $25.601bn as of August 24.
This was attributed to the inflow of funds into the country’s fixed income market as the Nigerian foreign exchange, forex, market recorded an inflow of $309 million on Monday — a considerable pitch from Friday’s transactions.
The trade included one $270 million transaction at 345 naira per dollar, by foreign investors buying local currency bonds. The inflow of forex saw the Nigerian naira firm from its opening 319.50/$1 earlier in the day to 315.50 per dollar.
The forex market registered $327 million worth of trades on Monday, about six times more than its usual volume, the Chief Executive Officer of FMDQ OTC Securities Exchange, Mr. Bola Onadele told Reuters.
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.
The Nigerian forex market had experienced an artificial dollar scarcity over the past week, following the decision of the CBN to cut nine deposit money banks from the market. The banks were banned, following a breach of Treasury Single Account, TSA, guidelines by the lenders.
Meanwhile, traders told the news agency that the central bank sold an undisclosed amount of dollars close to the end of market session, to help prop up the naira.
The latest 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.
