In a bid to fortify Nigeria’s foreign exchange reserves and stabilize the Naira amidst mounting forex pressures, the Central Bank of Nigeria (CBN) has successfully auctioned a record N1.3 trillion in Treasury Bills, targeting overseas investors.
The sale of Treasury Bills, colloquially known as T-Bills, represents a strategic move by the CBN to address concerns surrounding the Naira’s depreciation amid constrained forex availability. These short-term government IOUs offer investors a secure avenue to generate returns on their investments.
To attract foreign investors, the CBN offered competitive interest rates, resulting in an overwhelming demand for T-Bills. Investor bids surpassed the initial offering of N312.9 billion, reaching a total of N1.5 trillion. Ultimately, the Bank awarded N1.3 trillion in T-Bills at an interest rate of 21.49 per cent.
The proceeds from the sale are earmarked for intervention in the forex market, where the CBN intends to bolster the supply of dollars by purchasing them and selling Naira. This influx of foreign currency is anticipated to alleviate the current high exchange rate of approximately N1,500 to a dollar.
A stronger Naira not only enhances the affordability of imports but also serves as a mechanism to mitigate inflationary pressures, thereby fostering economic stability.
The Central Bank of Nigeria’s strategic sale of Treasury Bills represents a concerted effort to reinforce forex reserves and bolster the Naira, ultimately aiming to foster economic stability amidst prevailing forex challenges.
