“Naira defense to cost CBN N1.01 trillion in Q1 interest rates from NTB auctions.”
The Central Bank of Nigeria (CBN) is projected to incur approximately N1.01 trillion in interest payouts due to its aggressive defense of the naira, as revealed by analysis of Nigerian Treasury Bills (NTB) auction data for Q1 2024. This substantial expense highlights the efforts to curb inflation but poses fiscal challenges.
Despite rising interest rates, investor confidence remains strong, evidenced by robust subscription rates totaling N21.17 trillion for NTBs in the quarter. However, the CBN’s cautious liquidity management approach saw sales of only N5.64 trillion.
Interest rates surged across all NTB tenors from January to March
Interest rates surged across all NTB tenors from January to March, with rates peaking at 21.124% for the 364-day bill. This trend reflects investors’ appetite for higher returns amid tightening monetary policy.
While higher rates attract foreign investors, aiding naira stability, they also increase borrowing costs for businesses, potentially slowing economic growth. The CBN’s fiscal maneuvers, while bolstering confidence, impose significant fiscal burdens, limiting flexibility in other areas like developmental lending or currency interventions.
With global economic uncertainty, particularly in oil prices, the pressure on the CBN to balance naira defense with broader economic stability intensifies.
-
Share News with us via WhatsApp: 08163658925 or Email: naijaeyes1@gmail.com
Join Our Social Media Channels:
WhatsApp: NaijaEyes
Facebook: NaijaEyes
Twitter: NaijaEyes
Instagram: NaijaEyes
TikTok: NaijaEyes
#naijaeyesblog
