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CBN plans to sell off N1.64 trillion in Treasury Bills in Q2, 2024 - See what this means for the Naira

1 month ago   MARKET NEWS   Lagos   404 views Reference: 315

Location: Lagos


The Central Bank of Nigeria (CBN) plans to sell Treasury Bills worth N1.64 trillion in Q2 2024. These short-term debt instruments, used to borrow money from the public, will be issued in tenors of 91, 182, and 364 days. The program runs from March 7th to May 23rd, with the CBN selling N660.62 billion in March, N292.17 billion in April, and N688.3 billion in May.

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The aim is to manage the economy's money supply while addressing budget deficits and funding projects. This move may impact the Naira, with increased demand due to people buying these bills. The CBN's strategic sale helps regulate spending and keeps the economic wheels turning smoothly.

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Okay, let's break down what the Central Bank of Nigeria (CBN) selling Treasury Bills means for the Naira with a simple illustration:

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1. What Happens with the Naira:
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When the CBN sells these Treasury Bills, they're essentially borrowing money from the public, kind of like getting a loan from people in the country. Now, more Naira (the Nigerian currency) is flowing from the public into the CBN's piggy bank in exchange for these Treasury Bills.

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2. Impact on the US Dollar and Other Currencies:

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*The focus here is mostly on the Naira, but indirectly, it can have some impact on other currencies. If more people in Nigeria are buying these Treasury Bills, it may lead to increased demand for Naira, as people need Naira to purchase these bills.

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3. Controlling Money Supply:
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The CBN is smart; they use these Treasury Bills not just to get money but also to control how much money is floating around in the country. By selling these bills, they can influence the amount of money available in the economy. If they want to reduce spending, they can sell more bills, soaking up excess Naira and reducing its supply. If they want more spending, they might sell fewer bills.

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4. Short-Term Nature:
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Treasury Bills are like short-term deals, less than a year. So, it's not a long-term commitment for the CBN or the people buying these bills.

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Final thought: The CBN is like a financial manager for Nigeria, using Treasury Bills to get some quick cash, manage the amount of money floating around, and keep the economic gears turning smoothly. It's like a little financial dance to make sure everything stays balanced.