EKO HOT BLOG reports that the Central Bank of Nigeria (CBN) has recently sold a record N1.3 trillion in Treasury Bills, with a specific focus on attracting overseas investors. This strategic move is designed to bolster the influx of foreign exchange (forex) into Nigeria, ultimately aiming to fortify the value of the Naira.
Lately, the Naira has faced significant pressure due to a shortage of available forex.
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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.
By offering attractive interest rates, the CBN is hoping to entice foreign investors to buy these T-Bills.
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.
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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.
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