The Naira is expected to trade in a tight range at the official and parallel markets this week as the Central Bank of Nigeria (CBN) struggles to curb speculation on the currency and reduce pressure on the dwindling external reserves.

The naira was quoted at N465 against the dollar at the parallel market on Friday, lower than 460/dollar recorded last week.

At the official interbank market, the naira was quoted at 314.80/dollar.

“The Central Bank has intensified its effort to manage the exchange rate at the present level by influencing how the scarce dollar is sold at the parallel market, while selling dollar daily at the interbank market to keep it from falling further,” a trader at one of the commercial banks told Reuters.

Meanwhile, the country’s overnight interbank lending rate fell to 14 percent on Friday from 22 percent previous week after the central bank repaid matured treasury bills, injecting cash into the banking system, traders said.

Traders said the bank injected around 140 billion naira ($444.98 million) through its pay-out of matured open market operations bills, which helps lower borrowing costs among banks.

The cash helped money-market liquidity, traders said, despite bond and treasury bill sales this week. The debt office raised 39 billion naira with local currency bonds and 120 billion in short-dated treasury bills this week.

Also, the CBN sold N119.92bn ($394.21m) in short-dated treasury bills at an auction on Wednesday, with mixed yields, data from the central bank showed on Friday.

The bank sold a total of N32.43bn of the three-month paper at 13.99 per cent, broadly unchanged from 14 per cent at the last auction on November 2.

It sold N22.82bn of the six-month debt at 17.40 percent, down from 17.50 per cent at the previous auction, while a total of N64.67bn of one-year bills was sold at 18.70 per cent, compared with 18.30 per cent previously.

Total subscriptions rose to N158.07bn, compared with N122.96bn at the last auction, the data showed.

The Federal Government issues treasury bills to raise cash to fund the budget deficit, manage banking system liquidity and curb rising inflation. 

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