By Dipo Olowookere
In order to soak up excess liquidity in the financial system, the Central Bank of Nigeria (CBN) on Thursday conducted an Open Market Operations (OMO).
However, this sale of treasury bills via the secondary market by the apex bank was not too successful as investors did not fully participate in the exercise.
The central bank had intended to mop up N1 trillion from the system, but could only raise N517.62 billion from market players with the stop rates flat.
However, the amount raised by the CBN was able to soak the inflows from about N382 billion in OMO T-bills maturities yesterday.
Results from Thursday’s OMO auction showed that of the N200 billion 91-day bills offered by the bank, it was able to sell N84 million with the rate clearing at 11.50 percent.
The bank offered N300 billion worth of the 182-day paper, but received subscriptions worth N74.12 billion from market players. The CBN later sold N62.80 billion worth of this bill at 13 percent.
For the 350-day note, the CBN offered N500 billion, but received subscriptions valued at N462.58 billion and sold N453.98 billion worth of the instrument at N14.50 billion.
The secondary treasury bills market is expected to remain relatively stable today with slight interests anticipated on the back of the still moderate level of system liquidity, barring a further OMO sale by the CBN.
Meanwhile, money market rate was relatively unchanged yesterday as the inflows from OMO maturities subdued the outflows in OMO sales.
While the Open Buy Back (OBB) rate slightly inched up to 4.50 percent from 4.33 percent, the Overnight (OVN) rate remained flat at 4.92 percent.
“We expect rates to close the week at these levels, barring a further OMO sale by the CBN,” Zedcrest Research said.
Adedapo Adesanya