T-Bill’s offer overshot by N148.4 billion, CBN debits banks with N362.4 billion

Interbank lending rates soar, reserves top $29b amid $2.83b intervention

The Federal Government’s debt strategy is now in full operation, as a N30 billion Treasury Bills (T-Bill) offering last week, was extended to N178.4 billion at 18.6 per cent, raising new deal worth N148.4 billion.

The treasury operations’ plan showed that it would redeem a total of N1.23 trillion in 91, 182 and 364 days securities and simultaneously roll the same back, with only an addition of N15.8 billion in first quarter of 2017, but now a 321-day bill has overshot the February debt schedule.

Consequently, the rates at which banks lend among themselves took an upswing at the close of transactions on Friday, particularly the Overnight, which rose to 25 per cent from 10.17 per cent, but later dropped to 18.67 per cent.

The Open Buy Back also hit 833 basis points to 17.83 per cent, from 9.5 per cent on Thursday. The money in circulation was also drained as the regulator debited commercial banks for bonds purchases worth N362.4 billion.

The move would sustain the already low money supply mode in the economy, aid the fight against inflation and provide immediate cash for the government to implement its planned budget.

However, analysts at SCM Capital, in a note to The Guardian, said the prevailing high rates would calm next week, as there are expected N120 billion maturities and repayment in treasury bills and the Federal accounts disbursements.

Meanwhile, the foreign exchange reserves have recorded a new level of $29.1 billion, after gaining about $880 million in two weeks,, from $28.2 billion at the end of January 2017.

This is coming, just as the regulator said it has disbursed $2.83 billion to support critical sectors of the economy between December 2016 and January 2017.

The resurging reserves’ profile has shown the regulator’s commitment and belief in building the stock of foreign exchange as panacea to regaining investors’ confidence, as well as attracting inflows, rather than outright devaluation.

However, the Naira was stable at the inter-bank market at N305.50/$, just as CBN maintained a daily intervention of $1.5 million, while at the parallel market, the local unit remained pressured at N516/$.

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