In the first quarter of 2025, the Central Bank of Nigeria (CBN) sold a total of N5.53 trillion worth of Treasury bills to investors, underscoring a strong demand for short-term naira-denominated assets amidst tightening liquidity and a volatile exchange rate environment.
Despite this substantial sale, the CBN rejected a significantly higher volume of bids totaling N9.7 trillion during the same period, reflecting a cautious approach to managing liquidity and interest rates in a turbulent macroeconomic climate.
The robust appetite for Treasury bills signals investors’ preference for risk-free government instruments, even as yields continue to trend upward. Analysts attribute the surge in demand to growing uncertainties in the foreign exchange market and lack of confidence in alternative investment options.
Meanwhile, the naira weakened sharply at the official foreign exchange window. According to data from the FMDQ Securities Exchange platform, foreign portfolio inflows into Nigeria dropped significantly in March 2025, hitting the lowest level recorded in the last six months. This development has compounded the pressure on the local currency and highlighted persistent challenges in attracting foreign capital into the country.
Market watchers say the sharp decline in foreign investor participation could be linked to macroeconomic instability, regulatory uncertainty, and delayed structural reforms. The CBN is expected to continue deploying monetary tools, including open market operations and liquidity management strategies, to navigate the evolving economic landscape.
As the apex bank balances inflationary pressures with the need to stabilize the naira, the coming quarters will test its resolve in achieving both exchange rate stability and investor confidence in the domestic debt market.
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