T-Bill Interest Rate Hits 32-Month High as CBN Sells N5.33 Trillion in Primary Market.

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The Central Bank of Nigeria (CBN) raised the interest rate on Treasury Bills (T-Bills) to 6. 49 percent in October 2022 in an effort to entice more investors, particularly during a time when inflationary pressures were present in the nation. This was the highest rate in 32 months.

Mr. Wole Adeyeye, an analyst at PAC Holdings, blamed the country’s growing inflation rate, which has increased the policy rate and contributed to the 6.49 percent interest on T-bills.

He pointed out that the increase in interest rates is anticipated to draw local and international portfolio investors into the fixed-income market. He pointed out that the steadily rising T-bill interest rate has led to significant portfolio realignments from stocks to fixed-income assets. Investors would switch to fixed-income assets when rates rise, he said.

According to experts at Cordros Research, the limited liquidity in the system last week caused investors to leave positions throughout the curve in order to satisfy their financial responsibilities, which caused sentiment in the T-Bills secondary market to become sour.

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