By Dipo Olowookere
As part of effort to squeeze excess liquidity in the system, the Central Bank of Nigeria (CBN) on Friday, June 23, 2017, conducted a special Open Market Operation (OMO) auction.
During the auction, the banking industry watchdog mopped up about N403.1 billion.
Before then, the central bank had conducted OMO sales on all trading days save for Thursday.
As a result, system liquidity moderated on all sessions save for Thursday when a FAAC inflow of N275.2bn hit the system.
It was observed that the mopping up of N403.1 billion by the CBN made the Open Buy Back (OBB) and Overnight (OVN) lending rates to increase by 25bps and 42bps at the close of the trading week.
Consequently, the rates closed at 8.8 percent and 9.5 percent on Friday, down 6.4 and 6.2 percentage points W-o-W respectively.
However, analysts at Afrinvest expect the CBN to continue its weekly SMIS sales and OMO mop-ups in the week ahead, pointing out that, “The impact of these sales will keep liquidity tight barring any major inflow. Hence, we expect money market rates to trend higher.”
Adedapo Adesanya 
Modupe Gbadeyanka