The Central Bank of Nigeria, CBN, has sold N676.65 billion through the Open Market Operation, OMO, at a 21 per cent interest rate to manage the money supply.
This is according to data from CBN’s first April Auction schedule on Thursday.
Primarily, the auction targets the management of the banking system’s liquidity to prevent an oversupply of naira, which could trigger inflationary pressures.
Also, it aims to provide an avenue for the CBN to stabilise the financial markets by offering competitive returns to investors, thus aligning the country’s monetary policy with its economic objectives.
Accordingly, the apex bank leveraged higher interest rates to attract a strong turnout from investors, utilising OMO bills to absorb excess liquidity from the financial system.
Further analysis showed that with an offering of N75 billion, the 97-day bills attracted a subscription of N17 billion, with the total sale mirroring the subscription figure. These short-term bills, cleared at a stop rate of 19 per cent, reflected a conservative interest from investors.
The medium-term offering, consisting of the 188-day bills with the same N75 billion on the block, saw an elevated subscription at N20.25 billion, reflecting a conservative investor interest. The clearing stop rate of 19.50 per cent resulted in sales worth N7.25 billion, significantly below the amount offered.
