Investors’ Rush for 357-day OMO Pushes CBN’s Sales to N513.95bn

Kayode Tokede

Investors’ demand for 357-day Open Market Operation (OMO) auction lifted the Central Bank of Nigeria (CBN) total sales to N514.95 billion in the first auction for June 2024.

The central bank’s aggressive OMO auctions reflected its drive to control liquidity in the economy.

By selling bills at high-interest rates, it aimed to mop up excess money supply, which was crucial for combating inflation and strengthening the naira at the foreign exchange market.

From the auction conducted yesterday, THISDAY gathered that there was significant interest from investors in the 357-day OMO auction by CBN, with subscriptions and sales reaching N487.95 billion, thus, oversubscribing the N150 billion bills offered.

The apex bank sold the 357-day OMO bills at a stop rate of 22.33 per cent, making it another record high for the institution as it was determined to tackle inflation rate and stabilise the local currency.

The 189-day bill also had N75 billion on offer, but saw a lower subscription of just N21 billion, with a stop rate of 19.59per cent and eventually sold N16 billion.

In addition, the 105-day bill recorded a N25 billion as offered amount with N10 billion subscription by investors at a stop rate of 18.74per cent.

CBN, however, settled for N10 billion sales on 105-day OMO offered June 04, 2024.

The high interest rates also indicated the central bank’s commitment to making Nigerian securities attractive, especially to foreign investors, thereby drawing in capital that could help stabilise the financial market.

CBN was scheduled to hold a Treasury Bills (T-Bills) primary market auction today.

At the PMA, existing T-Bills totalling N221.13billion (N14.42billion, N26.82 billion and N179.89 billion across the 91-day, 182-day and 364.-day instruments, respectively) would mature and be rolled over.

The OMO and T-Bills auctions in June 2024 were the first since CBN’s Monetary Policy Committee (MPC) raised the Monetary Policy Rate (MPR) to 26.25 per cent in May 2024.

The CBN governor, Mr. Olayemi Cardoso, had explained that the strategy was to curb rising inflation rate, stabilise the exchange rate, and spur confidence in the banking sector and economy, at large.

He had further highlighted in the meeting with investors an outlook for sustained increases in the CBN’s foreign currency reserves, improved liquidity in the foreign exchange market, and imminent settlement of the remaining backlog of genuine foreign exchange transactions by the CBN.