By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has said it does not have any intention to prevent offshore investors from participating in its regular sale of short-term bills via the Open Market Operations (OMO).
Recall that a few years ago, the apex bank barred local investors from buying the liquidity management instrument.
The attractive financial asset was only made available to foreign portfolio investors (FPIs) as part of moves to boost foreign exchange (FX) inflows into the country, especially at a time the nation was experiencing a squeeze in FX liquidity, which was putting pressure on the Naira at the FX market.
As a result of this, domestic investors were not allowed to participate in the OMO sales, which had higher stop rates than the Nigerian Treasury Bills (NTBs), which had unattractive yields.
Last week, there were reports that the CBN was planning to phase out the involvement of offshore traders in the OMO sales.
According to Bloomberg, the director of monetary policy at the CBN, Mr Hassan Mahmud, had said last Tuesday that offerings to non-residents of OMO bills would “ultimately” be phased out.
The bank had outstanding OMOs of $8.3 billion as of March 4 from $31.9 billion as at the end of 2019, according to data compiled by Bloomberg. This was after barring domestic funds from buying the securities and reducing new issuances as the cost of offering the instruments spiked.
But in a response to an enquiry two days later, the acting director of communications at the central bank, Mr Osita Nwanisobi, said there was nothing of such at the moment.
“There is no plan by the CBN to stop OMO sales to foreigners,” he said.
Re-echoing this was the Governor of the CBN, Mr Godwin Emefiele, in an interview with ThisDay. He maintained that the central bank is not thinking about excluding offshore investors from the short-term bond market.
