What is a Liquidity squeeze and how does it affect Nigerian Treasury bills?
Here's everything you need to know about the liquidity squeeze in Nigeria and how it affects the country's T-bills.
Temmy Samuel
What is a Liquidity squeeze and how does it affect Nigerian Treasury bills?
A liquidity squeeze refers to a situation where there is a shortage of available cash or easily convertible assets in the financial system of a country. This can happen when banks, businesses, or investors struggle to access funds due to tight monetary policies, rising interest rates, or reduced lending by financial institutions. In this context, a liquidity squeeze means that there isn't enough cash circulating in the economic system of a country. This makes it harder for investors to buy Nigerian Treasury bills. Meanwhile, it's important to note that this drop in demand for government securities could be caused by government borrowing crowding out private sector access to funds (i.e., banks prefer to lend to the government instead of businesses). However, the Central Bank of Nigeria (CBN) was trying to address this issue in a recent unexpected move, where the apex bank added an extra auction to its calendar, during which yields on one-year T-bills rose to 24.90% from 22.52%. T…
About the author
Temmy Samuel
He is a seasoned journalist with extensive experience in consumer tech, economy, finance, business, money and politics. Currently chasing a BSc degree in Accounting.
