The Central Bank of Nigeria (CBN) offered $100 million to some retail banks in its first foreign exchange swap this year to curb surging liquidity in the system.

Bankers said the forex swap, a one week stop-gap measure to tackle excess naira cash in the system, was conducted to curtail the impact of the disbursement of June budgetary allocations to the three tiers of government this week.

"Few banks cleared the dollars on offer while the impact of the naira mopped-up has also shown on the interbank interest rates with both overnight and call money trading at 10 percent compared to 5.60 per cent on Wednesday," according to a dealer said.

CBN disbursed 266.59 billion naira ($2.09 million) in monthly budgetary allocations to government agencies on Monday and this caused interest rates to plunge below the regulator’s 5.50 per cent repo rate.
The CBN had missed its money supply target for the first quarter with broad money supply growing at an annualised 23.0 per cent compared to 19 per cent projected for the year.

Africa’s top oil producer had on June 15 compelled banks to underwrite over 150 billion naira in short-term treasury bills as part of its effort to mop-up excess liquidity in the system.