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Yields on Nigeria one-year treasury bill rise before central bank auction

Credit: REUTERS/JOE PENNEY

Yields on Nigeria's one-year treasury bill rose to 12% on Wednesday from around 10% on Friday after the central bank told dealers to bid higher rates at its auction, traders said.

By Chijioke Ohuocha

ABUJA, Aug 14 (Reuters) - Yields on Nigeria's one-year treasury bill rose to 12% on Wednesday from around 10% on Friday after the central bank told dealers to bid higher rates at its auction, traders said.

Traders said the central bank asked them to increase their rates at a bills auction on Wednesday compared with rates the bank paid at the last sale in July.

The bank plans to sell 20 billion naira worth of the one-year bill.

Traders said the central bank wanted to offer bills at higher rates to attract foreign investors to boost liquidity on the currency market, which would help support the naira.

On Friday, the naira NGN= eased to 364 per dollar, from a quote of 363.50 as falling oil prices tightened liquidity on the currency market.

A dollar shortage was initially caused by a slowdown of foreign inflows after local debt market yields declined.

Traders said the central bank asked them to bid for the one-year paper at around 13%, higher than the 11.1% the same tenor fetched at its last auction in July.

To curb dollar demand, Nigerian President Muhammadu Buhari on Tuesday told the central bank to stop providing funding for food imports.

Treasury dealers said they were waiting for clarity from the central bank on the currency ban for food imports.

(Reporting by Chijioke Ohuocha, Editing by Gareth Jones and Stephen Powell)

((chijioke.ohuocha@thomsonreuters.com; +234 703 4180 621; Reuters Messaging: chijioke.ohuocha.thomsonreuters@reuters.net))

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