The Central Bank of Nigeria (CBN) raised a total of N804.85 billion in its latest Open Market Operations (OMO) auction held on Monday, April 29, 2025, as investor appetite for high-yield, risk-free securities remained undeterred in the face of surging inflation and persistent excess liquidity.

The auction, which saw total subscriptions hit N1.057 trillion, was oversubscribed by 111 percent — a slight decline from the record N1.391 trillion bid during the previous auction on April 25. Then, the apex bank raised N1.008 trillion after offering two N500 billion instruments.

In this latest round, the CBN floated two long-tenor bills, a 329-day and a 350-day, with equal offers of N250 billion each. But the market made its preference clear: the 350-day paper attracted the lion’s share of attention, receiving a massive N923.60 billion in bids, over three times the offer, compared to the modest N133.25 billion bid for the 329-day paper.

The longer-tenor bill, maturing on April 14, 2026, was allotted N698.60 billion at a stop rate of 22.73 percent, with bids ranging between 22.4990 percent and 22.9700 percent. The shorter 329-day note, set to mature on March 24, 2026, was allotted N106.25 billion at a slightly lower stop rate of 22.69 percent.

The difference in investor behavior underlines growing expectations that Nigeria’s tight monetary stance, marked by historically high interest rates and an aggressive cash reserve ratio, is likely to persist, at least in the near term. This reflects market consensus that inflationary pressures are far from easing and that the CBN will maintain its hawkish posture to stabilize the naira and prevent capital flight.

Investors Betting on Prolonged Tight Monetary Conditions

The sustained demand for long-dated OMO bills underscores two critical trends: limited attractive investment alternatives amid global uncertainty, and a domestic macroeconomic environment defined by expanding money supply, weak fiscal buffers, and rising inflation.

According to the CBN’s own Money and Credit Statistics, Nigeria’s broad money supply (M3) rose by 3.2 percent in March to N114.22 trillion and has surged by 24 percent year-on-year. Net foreign assets have risen sharply by 38.9 percent to N45.17 trillion, indicating improved capital inflows and some buildup in external reserves. However, net domestic assets fell 11.7 percent to N69.05 trillion, suggesting continued fragility in domestic credit expansion.

In an attempt to rein in liquidity, the apex bank has kept the Cash Reserve Ratio at an unprecedented 50 percent, the highest globally, while the benchmark interest rate remains at a lofty 27.75 percent. But these measures have struggled to tame liquidity growth, let alone inflation.

Inflation climbed to 24.23 percent in March 2025, up from 23.18 percent in February. Month-on-month inflation rose 3.90 percent — the steepest jump this year — fueled by relentless food price hikes, higher transport costs, and the pass-through from currency depreciation. The real economy is feeling the squeeze, and the average Nigerian is left reeling from eroded purchasing power.

CBN’s Dilemma: Mopping Up Liquidity Without Choking Growth

The CBN’s increasing reliance on OMO auctions is not just a liquidity management tool; it has become a signal of policy intent. These frequent bill issuances serve as a brake on speculative activity in the currency market and help set a floor for short-term interest rates.

However, economists caution that the aggressive sterilization through OMO sales, while helping to manage inflation in the short term, may complicate broader monetary transmission and slow credit creation needed for growth. With banks locking up liquidity in government securities rather than lending to the private sector, the risk of crowding out productive investments looms large.

The asymmetric interest in the 350-day paper, compared to the weaker appetite for the 329-day note, also reflects how finely investors are calibrating duration in anticipation of future rate movements. There’s little optimism that inflation will ease significantly in the near term, so locking in longer-term returns is seen as a safer bet.

Macro-Policy Crossroads

This flurry of debt issuance comes amid broader questions about the sustainability of Nigeria’s policy framework. While the CBN has stepped up efforts to clean up excess liquidity and restore investor confidence, inflation remains stubborn, and fiscal pressures are rising.

The federal government’s growing reliance on domestic borrowing, alongside increased monetary sterilization by the CBN, may keep interest rates elevated for longer than anticipated. With global yields also on the rise, Nigeria faces the double-edged sword of needing to offer even higher returns to attract capital while also managing the cost of borrowing.

Many believe that the absence of coordinated fiscal discipline is undermining monetary tightening. The rising public debt stock and continued government spending, including large recurrent expenditures, threaten to dilute the CBN’s efforts to anchor inflation expectations.

Small-value packages shipped from China and Hong Kong will no longer be exempt from U.S. tariffs starting Friday, as President Donald Trump’s latest trade policy move takes effect.

The decision targets the long-standing de minimis rule, a provision Trump has denounced as a “big scam”, which has allowed low-cost goods worth under $800 to enter the United States duty-free. Its removal marks a sweeping change not only for American consumers but for the global flow of cheap goods that has defined e-commerce in recent years.

While U.S. shoppers can still order from platforms like Temu and Shein, they’ll now pay significantly more, as retailers adjust to the new tariffs. Items from China and Hong Kong will be taxed at 120% of their value or face a flat fee starting at $100, increasing to $200 by June. That policy, the Trump administration says, is designed to stop a loophole that allegedly helped conceal ingredients used in illicit fentanyl shipments — but the economic fallout of this decision is expected to go far beyond customs checks.

Impact on Chinese Exports and U.S. Inflation

The end of de minimis is expected to hurt both the Chinese and American economies in different ways. For China, it deals a blow to a growing segment of its export economy — one that’s been booming through direct-to-consumer platforms like Shein, Temu, and AliExpress. These platforms have surged in popularity across the U.S. by offering ultra-low-cost goods, made possible by cheap labor and the tariff loophole. With the new U.S. import fees, Chinese exporters will likely see a sharp drop in shipments, particularly of lower-margin goods like fashion, homeware, and accessories.

For the U.S., the consequences could be inflationary. Many low-income and middle-class Americans have relied on these discount platforms to access affordable products. With prices now climbing, in some cases more than doubling, purchasing power is set to decline further. Analysts warn this could drive up inflation, particularly in categories like clothing, small electronics, toys, and household items, where Chinese platforms have captured a significant market share.

Already, Shein has begun hiking prices ahead of the tariff’s effective date. Data from the company’s top 100 beauty and health products show an average price increase of 51%, while Temu is passing most of the tax burden directly onto buyers, resulting in similar jumps across its marketplace.

A Trade Standoff Between the World’s Largest Economies

The move further underscores a deepening trade standoff between the world’s two largest economies. The U.S. and China have continued imposing restrictions and retaliatory measures on each other’s industries, with both governments now appearing locked in a pattern of economic defiance. Economists warn that this tit-for-tat strategy risks dragging down global growth — particularly at a time when economic recovery from the pandemic and inflation shocks remains uneven.

Despite Trump’s claims that discussions with Beijing are ongoing, there’s little public evidence that high-level trade talks have resumed or that any significant progress is being made. The White House has offered no timeline for negotiation or de-escalation. The only visible shift has been a handful of exemptions granted by China on certain American goods, but these are seen by analysts as largely symbolic.

As of now, the Trump administration continues to maintain — and in some areas expand — the array of tariffs, export controls, and investment restrictions introduced during the previous trade wars. The de minimis overhaul adds a new layer of friction to U.S.-China commerce, targeting a volume-driven sector that handled over 1 billion individual shipments into the U.S. last year.

The de minimis threshold has long given foreign sellers, especially Chinese e-commerce firms, a competitive advantage. Introduced in 1938 and raised to $800 during the Obama administration, the exemption allows individual shipments valued below that amount to enter the U.S. without customs duties or formal paperwork. That’s considerably more generous than in most developed economies — Canada caps its threshold at $40, while the European Union sets it at around $150.

For years, Chinese platforms have used this to avoid the kind of regulatory scrutiny American retailers must endure. U.S. businesses importing the same goods must pay tariffs, fill out documentation, and endure customs clearance. Meanwhile, Chinese companies have been able to ship items directly to U.S. homes using logistics services like Yanwen, Cainiao, and cross-border couriers, bypassing much of the red tape.

Trump’s executive order signed last month reverses that equation. While it initially applies to China and Hong Kong, the administration has made it clear that the exemption will eventually be eliminated for all countries, once a system is in place to “expeditiously process and collect” duties on small parcels.

The Business Uncertainty Fallout

The change also creates uncertainty across logistics networks, especially for carriers that process large volumes of international parcels. DHL Group CEO Tobias Meyer said the impact depends on how the U.S. enforces the new system, particularly in terms of defining what constitutes formal versus informal clearance.

“For a formal clearance into the United States, you need additional data items,” Meyer told Bloomberg Television. That means more paperwork, higher compliance costs, and potentially slower deliveries for millions of packages.

The implications are vast. Independent U.S. sellers using Chinese suppliers via platforms like Amazon, Etsy, or eBay may struggle to maintain their margins. Drop shippers who rely on just-in-time imports from China now face steep duties, and some may be pushed out of the market entirely.

Trump has attempted to frame the move as a blow to fairness, saying the exemption has undercut American small businesses.

“It’s a big scam going on against our country, against, really, small businesses — and we’ve ended it,” he said at a cabinet meeting Wednesday.

But for consumers, the shift may feel more like a penalty. Trump acknowledged this recently, stating that kids might now have “two dolls instead of 30” and that “maybe the two dolls will cost a couple of bucks more than they would normally.”

A New Chapter in U.S.-China Trade

The removal of de minimis signals that Washington is shifting to a more aggressive stance in enforcing trade fairness — even if it means short-term disruption. But with no clear plan for negotiations with China, and both sides showing little willingness to compromise, the world’s two largest economies are veering toward a prolonged standoff.

Economists say the defiance game, each country escalating measures with no sign of retreat, carries long-term risks. It could stall investment, worsen inflation, and choke the flow of affordable goods that consumers have come to rely on.

In this new phase of economic nationalism, the question is no longer just about who wins or loses — but how much pain both sides are willing to endure.