May 23 (Lagos) - Naira remained weak even as the Central Bank sold $400 million dollars at its forex auction held in Abuja. The central bank sold $400 million at 153.38 to the dollar at its auction, short of the $452.31 million demanded, but higher than $300 million sold at 153.21 to the dollar at its auction on Wednesday last week. To stay updated with Nigeria's financial environment, visit http://www.easykobo.com

Some oil companies sold dollars last week and today adding some strength to the Naira which still overall remains weak. There is speculation that more multinationals will sell Dollars in a few days adding some strength to the Naira. One could say that the Naira strengthened over a five day period, rising from 156.70 to 156.63 but it is very marginal. Some traders told reuters that they expected Naira to strengthen in the coming days.

Interbank lending rates declined on average to 9.16% from 9.41% last week. There was more liquidity in the system following budgetary allocations to government agencies. Last week, the federal government distributed 455.6 billion naira to its federal, state and local governments to cover expenditure for April, but dealers said only the portion meant for states and local government usually comes into the system.

The secured Open Buy Back (OBB) fell to 8.75 % from 9%, 125 basis points above the central bank's 7.50% benchmark rate and 3.25% points higher than the Standing Deposit Facility (SDF) rate.

The market opened with a balance of about 76 billion naira compared to a negative balance of 19.3 billion naira last week, but dealers said the outlook favoured rising lending rates next week because of funding of foreign exchange and bonds purchases.

7 Day NIBOR rose to 10.16% from 9.83% last week

30-Day NIBOR rose to 11.45% from 11.29% last week.

60-Day NIBOR rose to 11.95% from 11.70% last week.

90-Day NIBOR rose to 12.54% from 12.33% last week.

Guaranty Trust Bank issued a 5 year, 7.5% coupon, $ 500 million Eurobond was heavily oversubscribed with asset managers buying 56%, banks 21% , hedge funds 12% and others 9%. The bond was issued at $ 98.98 and is already trading at a premium at $101.13 as of today morning. The bond has a good long term rating of B+ from international rating agency fitch.

Some dealers told reuters that they expected rates to trend upward next week as funding for bonds and foreign exchange purchases drains liquidity from the system.

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