CBN Mops Up N4.8trn from Two High-Ticket OMO Bills Auctions
The Central Bank of Nigeria (CBN) mopped up N4.8 trillion from excess liquidity in the financial system by selling OMO bills to deposit money banks (DMBs) and foreign investors.
The large amount was withdrawn from the banking system last week as the Apex Bank stepped up its aggressive liquidity management to reduce lenders’ ability to create additional credit.
At the first open market operation auction, the CBN raised N2.7 trillion across short-term tenors, with heavy subscription levels exceeding the N600 billion offer size.
The authority also floated an additional N600 billion in OMO bills for subscription on June 23, the day after the first auction, and raised N2.1 trillion in total to match investor subscriptions.
System liquidity was in surplus throughout last week despite the CBN’s aggressive liquidity sterilisation efforts. The market opened with a robust net liquidity surplus of ₦4.40 trillion, supported by previous OMO bill maturities.
The market, however, recorded a ₦600 billion inflow from matured OMO bills, helping to reduce the impact of aggressive sterilisation of funds across the two OMO auction tenors.
At the close of the trading session, financial system liquidity remained comfortably positive, closing the week at ₦4.10 trillion, up from ₦3.98 trillion the previous week, according to Cowry Asset Management Limited.
The investment firm reported that the ample liquidity environment moderated funding pressures in the interbank market, although rates edged marginally higher.
The Overnight Policy Rate (OPR) remained unchanged at 22.00%, while the Overnight (O/N) rate inched up by 3 basis points to 22.23% from 22.20% in the preceding week.
Similarly, the Nigerian Interbank Offered Rate (NIBOR) advanced across all maturities, reflecting cautious liquidity management by banks amid sustained CBN sterilisation activities.
The Nigerian Interbank Borrowing Rate (NIBOR) rose by 6 basis points to 22.28%, while the 1-month, 3-month, and 6-month tenors increased by 27bps, 38bps, and 70bps to settle at 22.74%, 23.19%, and 23.69%, respectively, analysts said.
