The Central Bank of Nigeria (CBN) has mopped up a total sum of N7.5 trillion through its Open Market Operation (OMO) in the first three months of 2019.
Data from the CBN website revealed that a total of N2.69 trillion was sold in March. The minimum and maximum OMO sale by CBN in March was N116.3 billion and N1.08 trillion respectively.
However, between January and February, the CBN according to his financial data revealed that N2.38 trillion and N2.45 trillion OMO was sold respectively.
The CBN OMO bills were utilised as the main instrument for liquidity management. The bill auctions were also used to boost tradable securities and increase activities in the secondary market.
According to financial data of the CBN, an accumulative N2.08 trillion and N1.97 trillion worth of OMO was sold in January and December 2018 respectively.
As a result of its restrictive monetary policy, the apex bank intensified its mop-up of excess liquidity in the system by the sale of treasury bills with OMO.
The CBN does not only use OMO; it also uses Treasury Bills and Federal Government Bonds to stem inflationary pressure and curtail liquidity arising from maturing bills.
According to CBN, OMO sales have attracted rates between 17.5 per cent and 18.5 per cent, a move to keep the foreign exchange stable.
The apex bank in 2017 offered OMO bills worth N13.76 trillion, while total public subscription and sale amounted to N12.3 trillion and N11.34 trillion, respectively, compared with N6.73 trillion, N10.29 trillion and N7.86 trillion offered, subscribed and sold, respectively, in 2016.
According to CBN, “the increase in the sale of CBN bills, in the review period was attributed, largely, to the increased number of OMO auctions conducted to curb excess liquidity, occasioned by maturing CBN bills, monthly disbursement of statutory revenue and swaps transactions to avoid liquidity surfeit in the banking system.”
The managing director, Maxifund Investments and Securities Limited, Mr Okechukwu Unegbu, attributed the increased OMO sales to improved economy and policy stance of the CBN.
He noted that OMO sales have impacted on the capital market and money market as investors are reaping from the daily auction.