CBN sells N7.5trn OMO in three months


The Central Bank of Nigeria (CBN) has sold N7.5 trillion in its Open Market Operation (OMO) in first three months of this year.

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 its 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 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 sale of CBN bills, in the review period, was attributed, largely, to 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.

His words, “OMO is one of the instruments CBN used in controlling money in circulation, making sure the rate of inflation is reduced. Investors will always go to where it is easy for them in terms of reaping their investment, be it short-term or long-term.

CBN Governor, Mr. Godwin Emefiele,  last month predicted that monetary policy stance would remain judicious, research-driven, adequate and supportive of the real economic subject to underlying fundamentals.

He pointed out that the current tight stance was expected to continue in the near-term, especially in view of rising inflation expectations and exchange market pressures.

He explained, “Though we will act to appropriately adjust the policy rate in line with unfolding conditions and outlooks, the CBN will continue to ensure that the policy interest rate is delicately set to balance the objectives of price stability with output stabilisation.

Meanwhile, amidst the continued CBN intervention – wherein $210 million was distributed across its different strata of foreign exchange windows – the naira appreciated by 0.04per cent to N360.14 at the Investors & Exporters foreign exchange (I&E FX) window, but was flat at N360 at the parallel market.

Data gathered from FMDQ OTC Securities showed that total turnover in the I& E FX increased by 8.25per cent to $1.18 billion last week. Meanwhile, the foreign reserves, according to data by CBN, recorded accretion for the sixth consecutive week, rising by $42.9 million to $44.72 billion.

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