Central Bank Sells N1.6trn OMO Bills to Tame Liquidity
The Central Bank of Nigeria (CBN) floated a fresh OMO bill for subscription on Tuesday, aiming to raise N600 billion across three tenors.
The action is part of an attempt to reduce excess cash available to banks to drive credit growth, aiming to control inflation amid an uncertain interest rate outlook.
The latest open market operation targeted N200 billion each from its 35-day, 70-day, and 126-day OMO bills, auction details obtained by MarketForces Africa revealed.
The attempt to tighten liquidity was driven by a flood of excess cash in the banking system. Investment banking firms reported that System liquidity improved sharply by 40.17% to NGN6.90trn, following the N2.07trillion repayment of the matured OMO instrument.
The excess liquidity in the money market prompted the CBN to float an OMO auction offering N600.0 billion. Total subscriptions amounted to N2.7 trillion, according to CardinalStone Securities Limited.
Eventually, the CBN sold approximately N1.6 trillion at stop rates of 21.54% for 35-day OMO bills, 20.70% for 70-day OMO bills, and 20.10% for 126-day OMO bills, respectively. FirstHoldco Soars 16.51% in 2-Day, Investors Bet on
