The Central Bank of Nigeria (CBN) at the weekend, sold about N51 billion ($168 million) worth of treasury bills to mop up liquidity even as the overnight lending rate traded flat around 10 per cent, traders said.
The bank sold N25 billion of 174-day open market operation bills at 18 per cent and N26 billion of the 364-day paper at 18.5 per cent at an auction of Friday. The transaction brought the total of debt sales last week to N370.67 billion as the CBN has been trying to remove cash from the banking system to contain annual inflation, which hit a more than 11-year high in September.
Financial market analysts said liquidity got a lift by the CBN’s budget allocations for government agencies on Monday and the repayment of matured treasury bills due on Thursday. Traders said major players were willing to lend their cash at 10 percent for overnight lending, unchanged to Thursday. “We expect the overnight rate to remain stable around the present level next week unless the central bank sustains its cash withdrawal exercise,” one trader said. Read more