Nigeria sold 207.3 billion naira ($1.3 billion) of Treasury bills at an auction yesterday, with yields rising from a previous sale after the central bank said it increased lenders’ reserve limits.
The Central Bank of Nigeria sold 34.9 billion naira of 91- day bills at a yield of 13.94 percent, 19 basis points more than at an auction on July 11. It also sold 60 billion naira of 182- day securities with a yield six basis points higher at 14.94 percent and 60 billion naira of 364-day notes at 14.966 percent.
The central bank said on July 24 it increased the amount of cash as a percentage of deposits that commercial banks must hold with the regulator to 12 percent from 8 percent and kept its interest rate unchanged at 12 percent to combat inflation and support the naira. Inflation accelerated to 12.9 percent in June, from 12.7 percent in May, the Abuja-based National Bureau of Statistics said July 18.
“The unexpected increase in the Cash Reserve Requirement ratio to 12 percent from 8 percent, resulted in a sharp increase in yields at the short end,” Samir Gadio, an emerging-markets strategist at Standard Bank Group Ltd. in London, said in an e- mailed reply to questions today.
An additional 9.1 billion naira of 91-day bills, 25.3 billion naira of 182-day debt and 18 billion naira of 363-day securities were sold to non-competitive bidders, while total bids at the auction amounted to 448 billion naira, according to the central bank.
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