National Telescope national telescope newspaper
The Central Bank of Nigeria (CBN) has removed N676.65 billion from circulation through the Open system Operation (OMO) operation at a 21 percent interest rate in an attempt to purify the financial system.
There are two purposes for the auction. Its main goal is to control the liquidity of the financial sector in order to avoid an excess of naira, which could lead to inflationary pressures. Second, by giving investors competitive returns, it seeks to give the CBN a way to stabilize the financial markets and match the nation’s monetary policy with its economic goals.
The top bank used OMO bills to remove excess liquidity from the financial system by leveraging higher interest rates to draw in a large number of investors.
The breakdown reveals that the 97-day bills, which were offered for N75 billion, drew a subscription of N17 billion, with the final sale amount matching the subscription amount. Investor caution was evident in these short-term bills, which were cleared at a 19.00 percent stop rate.
A conservative interest from investors was also evident in the elevated subscription at N20.25 billion for the medium-term offering, which consisted of the 188-day bills with the same N75 billion on the block. Sales of N7.25 billion were achieved with a 19.50 percent clearing stop rate, which was much less than what was quoted.
The 363-day bills, which dominated the auction, had an amazing pull, attracting an incredible subscription of N1.16 trillion against an offer of N350 billion. With the CBN selling, this tenor had the greatest stop rate of 21.1250 percent.
While the N652.40 billion, went above the investors’ preference for a long-term yielding securities.
