CBN issues N32 bn treasury bills to mop up liquidity

Central Bank of Nigeria sold N31.94 billion treasury bills on Friday in a bid to mop up liquidity in the money market while overnight lending rate fell. Traders said the bank sold N31.52 billion of 349-day treasury bill at 18.59 per cent and N440 million of 160-day treasury bill at 17.98 per cent at an auction on Friday.
Cost of borrowing among commercial banks however dropped to around five per cent on the interbank market from around 8.5 per cent last week.
Traders said cash balance in commercial banks’ accounts with the central bank stood at N320.35 billion on Friday, boosted by the repayment of around N287.39 billion in matured treasury bills on Thursday.
“Interbank rate is at low level because the central bank sold fewer dollars this week (on the currency market),” one currency trader said.
Traders expect rates to remain flat next week unless the central bank decides to take advantage of the low rates to mop-up excess liquidity from the banking system.