CBN Projected to Float OMO Bills Auction as Liquidity Spikes
The Central Bank of Nigeria (CBN) is expected to float an open market operation, where short-term investment securities, OMO bills, will be deployed to mop up excess liquidity in the financial system.
System liquidity remained robust, expanding by 31.90% to close at a net long position of ₦3.63 trillion compared to ₦2.75 trillion recorded in the previous day.
This uptrend is largely attributed to an OMO maturity repayment totaling ₦993.00 billion. In addition, Deposit Money Banks’ (DMBs) placements at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) window increased to ₦2.55 trillion.
Additional inflow of ₦24.05 million from Primary market activities also bolstered liquidity conditions in the money market. This surplus was partly offset by ₦10 billion borrowing at the Standing Lending Facility (SLF) window.
However, average funding cost spiked by 3bps to 22.68%, as the Open Repo Rate (OPR) remained steady at 22.50%, while the Overnight Rate (OVN) rose by 6bps to 22.86%.
Barring any significant outflow, system liquidity is expected to remain robust. Market analysts however noted that the CBN could sterilize excess liquidity via OMO issuances this week.
The secondary market for Treasury bills closed bearish as the average benchmark yield expanded by +2bps to close at 17.63%. Meanwhile, the secondary market for OMO closed bullish as average yield declined by -1bp to close at 21.16% CBN Slowdown Naira Appreciation, Mops Up U.S. Dollar
