By Okoronkwo Chuks
The Central Bank of Nigeria (CBN) last week sold about N400 billion worth of Treasury bills to check excess liquidity in the money market.
The 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 commercial 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 said, adding that the rate eventually settled around between 10 per cent and 12 per cent.
Markets had opened on Thursday with a surplus liquidity of about N467 billion due to an injection of matured Treasury bills until the central bank later debited banks for the purchases of N302.4 billion in primary market Treasury bills.
Traders said the central bank on Friday further moved to reduce liquidity with the sale of open market operations bills, which fetched returns above the inflation rate.
Federal Government raised N302.4 billion at Wednesday’s Treasury bills auction, more than the N242 billion planned due to strong demand for the one-year debt, while payment for the purchase was debited from commercial lenders’ accounts on Friday.
Local currency traded flat at both official interbank window and parallel market, with black market traders quoting the naira flat at N498 to the dollar. Commercial lenders quoted the currency at N305.25 a dollar, about the level it has traded since August.