To Curb Inflation And Stabilise Naira, CBN Embarks On Aggressive Liquidity Mop-Up, Raises N750 Billion Treasury Bills

To Curb Inflation

OpenLife Nigeria reports that  the Central Bank of Nigeria is poised to raise N750bn through the Nigerian Treasury Bills primary market auction on Wednesday, intensifying its liquidity mop-up efforts as part of its aggressive monetary policy framework.

Market analysts predict robust investor demand, particularly for longer-term instruments, despite yields trending upwards. The auction will feature N100bn each for the 91-day and 182-day Treasury bills and N550bn for the one-year paper.

This move aligns with the CBN’s restrictive monetary policy stance, aimed at curbing inflation and stabilizing the naira, with the Monetary Policy Rate at 26.50 per cent.

Historically, large volumes of maturing Open Market Operations bills and government payouts have injected substantial liquidity into the banking system.

By offering N750bn in NTBs, the CBN seeks to absorb excess cash and mitigate inflationary pressures. AAG Capital Limited notes that policy tighteners are driving rates up, expecting stop rates to remain broadly stable with a slight upward bias. Investor appetite for government securities remains strong, driven by the government’s fiscal strategy and high yields.

The previous auction saw N2.03tn in subscriptions, with N1.06tn allotted to investors.

With N1.86tn focused on the 364-day paper, expectations are high for Wednesday’s auction. Meanwhile, Nigeria’s foreign exchange market recorded a significant decline in turnover, dropping 46.57 per cent to $1.631bn.