LAGOS Oct 13 (Reuters) – Yields climbed higher at Nigeria’s short-dated treasury bill auction on Thursday after the central bank hiked its benchmark interest rate this week much further than expected to support the local naira currency.

The central bank sold 201.82 billion naira ($128 billion) in 91-, 182- and 364-day treasury bills at its regular auction with yields reflecting the 275 basis points increase in the monetary policy rate to 12 percent on Monday.

It sold 70.15 billion in the 91-day bill at 15 percent marginal rate, 63.49 billion naira in 182-day paper at 16 percent, and 68.18 billion naira in the 364-day bill at 16.22 percent.

The papers were sold at a lower marginal rate at the last auction in September with the 91-day paper attracted 10.23 percent, 182-day at 10.85 percent and 364-day at 11.24 percent.

Traders said the higher-than-expected rise in yield on the treasury bills led to the shorting of the bond market on Thursday as longer maturities are unable to compete.

Sub-Saharan Africa’s second biggest economy issues treasury bills regularly as part of monetary control measures to help lenders manage their liquidity.

Total subscription stood at 224.04 billion naira compared to the 110 billion naira demanded at the previous auction. ($1 = 156.500 Nigerian Naira)

Source: Reuter /Reporting by Oludare Mayowa; Editing by Joe Brock/Anna Willard