Naira drops as DMO auctions N183.24bn Treasury Bills

The naira yesterday depreciated against the US dollar, across all segments of the foreign exchange market after the Debt Management Office (DMO) auctioned N183.24 billion worth of Treasury Bills.
The DMO yesterday sold N183.24 billion worth in treasury bills at an auction on Wednesday, with mixed yields on all the tenors, data from Debt Management Office showed on Thursday.
Consequently, the naira lost N3.00k at the bureau De Change segment, as it closed at N420 against the dollar. This represents 0.71 percent fall compared to N417/$ closed the previous day, BusinessDay findings show.
At the inter-bank spot market, the local currency fell slightly against the greenback by N0.60k or 0.20 percent. It closed at N306.93k as against N306.33k the previous day, data from FMDQ show.
The nation’s currency also weakened against the dollar at the parallel market, losing N2.00k or 0.47 percent to close at N425/$ yesterday from N423/$ on Wednesday, BusinessDay findings show.
The naira is expected to remain stable around the present level at both official interbank and parallel markets as demand from holiday makers slows and the Central Bank ups its support for the local currency at the official window.
“We don’t expect any major depreciation of the naira in the near term as most summer holiday makers are back and demand for the dollar slow a little,” Aminu Gwadabe president of association of bureau de change operators told Reuters.
The debt office raised 48.10 billion naira of three-month paper at 14 percent, down from 14.38 percent at Aug. 31, auction, sold 48.45 billion worth of the 6-month paper at 17.77 percent, higher than 17.50 percent previously.
A total of N86.69 billion was sold in the 1-year debt at 18.48 percent against 18.42 percent at the last auction.
In another development, Nigeria raised N121 billion ($372.88 million) in an auction of local-currency bonds on Wednesday, with yields higher across the board, the Debt Management Office said on Thursday.
The debt office sold 15 billion naira of 2021 paper at 15.14 percent at Wednesday’s auction, compared with 15.08 percent at the previous auction last month.
It also sold N30 billion of 2026 debt at 15.53 percent, against 15.28 percent, and 60 billion naira of 2036 debt at 15.59 percent, compared with 15.53 percent.
The debt office also allotted an additional N16 billion worth of the 2021 debt on a non-competitive basis to mandate clients.
Nigeria has said it would borrow about N900 billion locally to finance part of the N2.2 trillion deficit in its 2016 budget, to plug shortfalls.
Nigeria issues local bonds as part of measures to finance the government budget deficit and also to help manage liquidity in the banking system .