The Central Bank of Nigeria (CBN) has significantly reduced interest rates on Treasury bills with respect to a decline in the country’s inflation rate, spurring investors to increase their stake in naira assets.
At a recent auction, the CBN offered N700 billion worth of Treasury bills across 91-day, 182-day, and 364-day maturities.
Despite a liquidity shortage exceeding N1 trillion in the money market, investor demand remained high, with total subscriptions getting far higher than N2.4 trillion.
The CBN ultimately allocated N774.13 billion in Treasury bills, with interest rates falling sharply. The 91-day bill dropped by 1% to 17%, the 182-day bill declined by 0.5% to 18%, and the 364-day bill recorded the biggest cut, falling by 1.89% to 18.43%.
This rate adjustment follows a drop in inflation to 24.48%, positioning it below the CBN’s benchmark interest rate of 27.50%.
As a result, investors are now benefiting from positive real returns on government securities.
With shifting economic policies and inflation trends, Nigeria’s financial market continues to evolve, drawing strong investor interest.