In a significant shift signaling a hawkish monetary policy stance, the Central Bank of Nigeria (CBN) has raised the stop rates on Treasury Bills, with the 364-day bills reaching 19 per cent per annum. The move comes amidst efforts to stabilize the exchange rate and curb inflationary pressures.
Previously, at the auction held on January 29th, the interest rates for these bills stood at 5 per cent for the 91-day maturity, 7.15 per cent for the 182-day maturity, and 11.54 per cent for the 364-day maturity. The sudden increase reflects the CBN’s proactive approach to address currency depreciation and inflationary trends.
With a total offer of N1 trillion, investor demand exceeded expectations, reaching N2.3 trillion. Notably, the oversubscription underscores market confidence in the safety of Nigerian Treasury Bills despite the higher interest rates.
For the 91-day bills, investors bid within a range of 7 per cent to 17.2 per cent, with total subscriptions amounting to N39.9 billion, matching the offer from the CBN.
Similarly, the 182-day bills saw bids ranging from 4 per cent to 19.9 per cent, resulting in subscriptions of N76.8 billion against the CBN’s offer of N200 billion, with only N51.3 billion allotted.
The most significant demand was for the 364-day bills, with subscriptions reaching a staggering N1.8 trillion against the N600 billion offer.
The CBN allotted N908.7 billion at a stop rate of 19 per cent, with bid rates ranging from 13 per cent to 29.9 per cent.
The high-end bid of 29.9 per cent, slightly above the inflation rate, reflects investor sentiment and expectations for future interest rates.
Analysts anticipate further rate hikes in the near term as the CBN intensifies efforts to stabilize the exchange rate.
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