Dipo Olowookere
By Dipo Olowookere
The stop rate of the long-date bill issued at the Open Market Operations (OMO) on Friday was marginally slashed by the Central Bank of Nigeria (CBN).
Business Post reports that the liquidity management instrument was slightly reduced yesterday by the apex bank after investors continued to show huge interest for the one-year bill at the market.
A total of N300 billion worth of the bills were auctioned during the exercise in three different categories with N20 billion earmarked for 81-day tenor, N30 billion for the 179-day maturity, and N250 billion for the 361-day instrument.
However, the central bank received no bid for the short-dated bill, but got N7 billion for the mid-tenor bill and N544.8 billion for the long-dated investment tool.
When the CBN announced the results of the exercise and allocations for the respective bills, it again declared No Sale for the 81-day and the 179-day bills, while it allotted N481.3 billion for the 12-month bill, with the stop rate clearing at 13.26 percent, lower than the 13.28 percent it was issued at the previous session.
Business Post reports that it was the second time the central bank was cutting the stop rates of the one-year instrument at the OMO market. The first was when it was reduced to 13.28 percent from 13.30 percent at the Thursday, December 12, 2019 auction.
Meanwhile, the money market rates remained low yesterday in spite of the OMO auction debt, with system liquidity opening at about N1.4 trillion.
The positive cash inflows from OMO maturities of about N500 billion marginally raised the Open Buy Back (OBB) rate to 2.36 percent from 2.14 percent, and the Overnight (OVN) rate higher to 3.07 percent from 2.79 percent.
According to analysts at Zedcrest Capital, the money market rates are expected to slightly inch up at the beginning of next week “with Wholesale FX debit anticipated.”
“However, rates are expected to moderate towards the end of the week as OMO maturities of N400 billion impacts market liquidity positively,” the Lagos-based investment firm said in its report on Friday.
