The Central Bank of Nigeria (CBN) has sold a record N1.3 trillion in Treasury Bills, specifically targeting overseas investors.
This move aims to increase foreign exchange (forex) flowing into Nigeria, ultimately strengthening the Naira’s value.
The Naira has been under pressure lately due to a lack of forex available.
Treasury Bills, also known as T-Bills, are essentially short-term government IOUs.
They’re a secure way for investors to earn a return on their money.
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By offering attractive interest rates, the CBN is hoping to entice foreign investors to buy these T-Bills.
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This injects much-needed dollars into the economy, which helps stabilise and potentially lower the exchange rate.
The high demand for these T-Bills is a positive sign.
Investors submitted bids totaling N1.5 trillion, exceeding the N312.9 billion offered by the CBN.
The Bank ultimately awarded N1.3 trillion in T-Bills at an interest rate of 21.49 percent.
These funds will be used by the CBN to intervene in the forex market, buying dollars and selling Naira.
This increased supply of dollars should help bring the exchange rate down from its current high of around N1,500 to a dollar.
A stronger Naira makes imports cheaper and reduces inflation.