By Dipo Olowookere
The Central Bank of Nigeria (CBN) on Tuesday, November 06, 2018 conducted an unexpected Open Market Operations (OMO).
Business Post observed that the sale of the treasury bills at the secondary market was generally not successful as the apex bank could only raise N316.23 billion from the N500 billion worth of the instruments auctioned to investors.
From the N50 billion worth of the 121-day bills, the bank received subscriptions valued at N21 million, while from the N150 billion of the 184-day paper, the CBN got subscriptions worth N77.37 billion, and from the N300 billion worth of the 338-day note, the central bank had subscriptions valued at N245.22 billion.
A breakdown of the exercise showed that the CBN raised N21 million from the 121-day bill, which cleared at 11.50 percent; it raised N73.30 billion from the 184-day bill at 13 percent; while it raised N242.72 billion from the 338-day bill at 14.50 percent.
Business Post observed that the stop rates at this ‘emergency’ OMO auction were the same as the previous exercise.
At the secondary market yesterday, activities were muted as a result of the unexpected exercise, a divergence from the usual OMO T-bills maturity versus OMO auction trend in past sessions.
There were slight bearish sentiments on the short end of the curve, while the medium to long end of the curve traded flat due to more supply on OMO T-bills.
“We expect the market to trade with bearish sentiments due to continuous OMO auctions and subsequent retail forex sales expected later this week,” analysts at Zedcrest Research said.
Meanwhile, the money market rates inched up by 1 percent to close at 4.83 percent and 5.42 percent for Open Buy Back (OBB) and Overnight (IOVN) rates respectively, as the CBN sold N316.23 billion OMO T-bills in a bid to manage excess system liquidity.
“We expect CBN to remain aggressive with their liquidity mop up exercise as system liquidity remains robust closing the day ay N483 billion.
“Funding rates are consequently expected to oscillate in tandem with the level of liquidity in the system,” the firm added.
