Nigeria: CBN sells N400bn Treasury Bills to mop up liquidity

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The Central Bank of Nigeria (CBN) at the weekend sold N400 billion ($1.27 billion) of Treasury bills ,sending the interbank lending rate up to 12 per cent.

The apex bank sold N82 billion in 181-day Treasury bills at 18 per cent and N309 billion at 18.6 per cent, mopping up liquidity from the money market and pushing up the cost of borrowing among lenders. “We have some major placers quoting about 20 per cent for overnight placement, but most takers are not willing to borrow at that rate,” one dealer had told Reuters.

The markets had opened on Thursday with a surplus liquidity of about N467 billion due to an injection of matured Treasury bills until the CBN debited banks for the purchases of N302.4 billion in primary market Treasury bills.

Traders said the CBN further moved to cut liquidity with the sale of open market operations bills, which brought returns above the inflation rate.

The CBN raised N302.4 billion at the Wednesday’s Treasury bills auction, more than the N242 billion planned due to strong demand for the one-year debt, while payment for the purchased was debited from commercial lenders’ accounts on Friday.

The naira traded flat at both the official interbank window and parallel market, with black market traders quoting N498 to the dollar. Commercial lenders quoted the currency at 305.25 a dollar, about the level it has traded since August.

Meanwhile, data from the National Bureau of Statistics (NBS) showed that Nigerian Capital Importation, which covers fourth quarter of last year was estimated at $1.5 billion, a decline of 15 per cent quarter-on-quarter and 0.5 year-on-year.

Monthly imports within the quarter were relatively although December recorded marginally the highest level of $555 million.

Yearly, capital imports fell by 47 per cent from $9.6 billion in 2015 to $5.1 billion. The figure was the lowest since the series’ inception in 2007.

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