The Central Bank of Nigeria (CBN) raised the stop rate on its benchmark 364-day Treasury Bill to 17.59 per cent at Wednesday’s auction, defying market expectations that heavy demand would drive borrowing costs down.
Investors submitted ₦4.4tn (£2.1bn) in bids across three offered tenors—far exceeding the ₦700bn advertised by the apex bank.
The increase reverses a rate cut from the previous auction on 29 July and signals the central bank’s continued reliance on high yields to mop up excess cash from the banking system.
The one-year instrument saw the strongest demand, attracting ₦4.19tn in bids against a ₦500bn offer. Despite the massive oversubscription, the CBN chose to raise the clearing rate by 24 basis points while expanding its total allotment on the instrument to ₦1.26tn.
Rates on the shorter-dated bills remained unchanged, with the 91-day and 182-day instruments clearing at 16.30 per cent and 16.50 percent respectively. The 182-day bill was undersubscribed, receiving ₦63.97bn in bids for a ₦100bn offer.
The decision comes amid significant liquidity inflows into the financial system following a reported ₦2.48tn Open Market Operation (OMO) repayment on 11 August. Financial analysts suggest the rate hike indicates the CBN is prioritizing liquidity sterilization ahead of its upcoming Monetary Policy Committee meeting in September.
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