The Central Bank of Nigeria (CBN) is working hard to fix issues with the naira, our currency, and has made several important decisions in the past few weeks.
One of the latest steps is selling government bonds to foreign investors to help increase the amount of foreign currency available.
In the last two days, the value of the naira has started to drop again after initially improving in both the official and unofficial (or “black”) markets.
On Wednesday, March 6, 2024, the CBN managed to sell N1.3 trillion ($1.3 trillion Nigerian Naira) in treasury bills at a very high interest rate, aiming at attracting investments from foreign investors. This move is to help get more money into the country to support the naira, which has been losing value because there’s not enough foreign currency available.
What are treasury bills? They’re like short-term loans to the government, guaranteed by the CBN, that last up to one year.
The CBN sells these treasury bills every two weeks. People bid on them, and the CBN chooses the lowest average bid. They sell the bills for less than what they’re worth, and then, when the bills mature, they pay back the full amount.
In the end, the CBN gave out N1.3 trillion in treasury bills to the winning bidders at an interest rate of 21.49%, after receiving bids ranging from 17% to 27%.
The money from these sales will be used to help support the naira in the foreign exchange market and try to reduce the exchange rate to below N1,500 per US dollar. The naira’s value has dropped in the official exchange market. It went down by N3.31 in the official market, but it actually got a bit stronger in the unofficial market. Right now, one US dollar costs N1,605.74 in the official market and N1,615 in the unofficial market.