…As Naira slumps to 285/$

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By Blaise Udunze
THE Central Bank of Nigeria (CBN) is expected to debit commercial banks around N1.2 trillion to cover hard currency purchases, thereby triggering inter-bank overnight rate to 60 per cent from 18 per cent.
The deduction is coming on the heels of the special secondary market intervention sales (SMIS), which were made up of $3.5 billion in forward sales and about $530 million at the interbank market, were targeted at clearin g up the huge backlog of demands that have remained unmet.
However, the apex bank intervened for a second day on Tuesday to sell US dollars into the interbank market after floating the naira, which failed to attract trading be- tween banks due to liquidity concerns.
A total of $100 million, sold between N282 and N285, was done around 1200 GMT, as intervention from the central bank. The inter-bank market quoted total traded volumes of $142 million.
Also,    Nigeria’s    dollar- denominated bonds rose as much as half a cent, a day after the central bank abandoned its currency peg in an effort to ease chronic foreign currency shortages.
The 2021 issue gained 0.51 cents to trade at 99.760 cents in the dollar – its highest level since early November, accord- ing to Trade web data. The 2023 issue rose 0.40 cents to 96.150 cents, its highest level in more than 10 months.
The SMIS    auction, aimed at clearing mounting backlog in demand for foreign exchange, consisted of $532 million in spot sales and $3.48 billion in forwards contracts.
A breakdown of the con- tracts showed $0.69 billion in one month, $1.22 billion in two months and $1.57 billion in three months forwards.
“Few trades went through in the interbank forex market before the CBN auction, but volumes picked up after the results were released in the late afternoon. The interbank rate closed at N282/N283 post-CBN auction results,” Samir Gadio, Head of Africa Strategy and FICC Research at Standard Chartered Bank, said.
According to the Chief Executive Officer of Graeme Blaque Advisory, Zeal Akaraiwe, the “beginning is pro- gressive,” adding that though volatility is expected, once the backlogs are settled, the market will surely experience calm.