The 364-day treasury bills stop rates in Nigeria surged to 19% per annum, marking a clear shift towards a hawkish monetary policy by the central bank. This move comes amidst efforts to address the depreciation of the naira and combat soaring inflation rates. The 182-day and 91-day bills also experienced increases, reaching 18% and 12.2%, respectively.
This rate hike is viewed as a significant monetary policy maneuver aimed at curbing the devaluation of the naira and reducing excess money supply to tackle inflation. In the previous auction on January 29th, interest rates for these maturities were much lower, at 5% for the 91-day bills, 7.15% for the 182-day bills, and 11.54% for the 364-day bills.
Nairametrics had previously reported on the likelihood of the central bank offering higher interest rates for treasury bills as a strategy to counter the depreciation of the naira. The total offer of N1 trillion was oversubscribed, with investors staking N2.3 trillion. The one-year bill, with N600 billion on offer, received a massive N1.8 trillion subscription, of which the central bank sold N908.7 billion.
Key Details of the Offer:
- 91 days: Investors subscribed N39.9 billion, compared to the N200 billion offered by the central bank, with a range of interest rates bid between 7% and 17.2%. The central bank sold the entire N39.9 billion.
- 182 days: Investors subscribed N76.8 billion out of the N200 billion offered, with a range of bids from 4% to 19.9%. The central bank allotted N51.3 billion at a stop rate of 18%.
- 364 days: The one-year bill saw a three-fold oversubscription of about N1.8 trillion against the N600 billion offered. The central bank allotted N908.7 billion at a stop rate of 19%, with bids ranging from 13% to 29.9%.
The higher-end bid of 29.9%, slightly above the inflation rate, indicates investors’ expectations for rates. Analysts foresee further rate increases in the coming weeks as the CBN intensifies efforts to stabilize the exchange rate.
Nairametrics