By Stanley Opara with agency report

The Federal Government sold N107.64bn ($703m) in 91-day, 182-day and 364-day treasury bills on Thursday as part of measures to control money supply in the country.

The Central Bank of Nigeria said on Friday that it sold N50bn in the 364-day instruments at a 9.10 per cent marginal rate, N40bn in 182-day bills at 8.27 per cent and N17.64bn in 91-day bills at 6.85 per cent.

The yields on the paper were lower than at the previous auction this month, where the 364-day paper was offered at 9.59 per cent, 182-day at nine per cent and 91-day at 7.09 per cent.

According to a Reuters’ report, total subscription stood at N364.6bn, but the regulator stuck to its initial offer.

The country issues treasury bills regularly as part of measures to curb inflation, control money supply and help lenders manage their liquidity.

In a related development, the Nigerian inter-bank lending rates climbed to nine per cent on the average this week from eight per cent last week as a big cash withdrawal by state energy firm, the Nigerian National Petroleum Corporation, drained liquidity from the system, traders said on Friday.

The secured Open Buy Back rose to 8.50 per cent from 7.5 per cent. This was 200 basis points above the CBN’s 6.50 per cent benchmark rate and 4.5 percentage points more than the Standing Deposit Facility rate.

Overnight placement closed at nine per cent from eight per cent, while call money rose to 9.50 per cent from 8.50 per cent.

Traders said the NNPC had recalled about N35bn in part of its deposits with retail banks.

Outflows to foreign exchange and treasury bills purchases also helped reduce liquidity in the market, dealers said.

Traders said rates were likely to hold stable next week because of cash inflows late on Friday and expected additional inflows for government agencies’ personnel costs.

“The cost of funds should remain largely unchanged next week if there are inflows. This will counter the effect of outflows, with rates possibly trading around 8.5 per cent on the average,” one trader said.

The market had opened with a balance of N34.5bn ($225.5m), but the inflow of about N100bn from the federation account to some states late on Friday was seen helping to boost liquidity on Monday, dealers said.

The inflows should also help cushion the impact of a planned cash recall by the NNPC, traders said.

Source: Punch