The Nigerian money market has gone bonkers!

It's just crazy!

I called my account officer in GTB to enquire about deposit rates and he confirmed that GTB is offering 1% interest rates on all fixed-term deposits up to 50m naira!
Meanwhile, the same term deposit in a bank in Canada or the US can get one at least 2.5%.

Nigerian Treasury bill (NTB) rates went down as low as 2.5%!

I checked on Stanbic-Ibtc circular this morning and long term instrument - FGN Bond rates in the secondary market are down to almost 6%.

I checked on the FGN bond primary auction results as of 19th February 2020 and the bid for the highest tenure bond is almost 600% higher than the allotted securities, which shows a lot of parties are scrambling to buy these securities with no success.
This means many financial institutions have billions of Naira sitting idle!

Meanwhile, the Nigerian inflation rate this morning is 12.13%...

So if you have Naira sitting idle in a bank account or even in a fixed deposit, you are losing value as fast as Ben Johnson!

This is the outcome of the FGN borrowing trillions from the pension fund instead of borrowing from the public.

If this trend continues, there will be a lot of Naira chasing the USD...which means the likelihood of a market devaluation of the Naira is inevitable.

Folks with cash deposit depending on interest payouts for livelihood  - just a few months ago - will be forced to dip into the principal to pay bills...in addition to suffering the devaluing effect of a 12.13% inflation.

The thrust of the FGN's tough monetary policy is clear - folks should use the money to build businesses and create employment...but the environment is a tough one to risk one's money building a business!

Yeah...It's a tough economic world in Naija today.