In a significant monetary policy move on Monday, the Central Bank of Nigeria (CBN) successfully raised a total of ₦1.5 trillion through its latest Open Market Operations (OMO) auction, aiming to curb excess liquidity in the banking system.
Despite initially offering OMO bills worth ₦600 billion to commercial banks and foreign portfolio investors, the central bank saw overwhelming interest, particularly in the 204-day tenured bills. The auction, structured across two maturities—113 days and 204 days—witnessed no subscriptions for the shorter-term bills, while the longer-term segment drew immense attention.
According to CardinalStone Securities Limited, the CBN ultimately allotted ₦1.5 trillion at a stop rate of 23.87%, surpassing its offer by a significant margin. The financial market research firm noted that the auction recorded total subscriptions exceeding ₦1.6 trillion.
The strong demand for OMO instruments followed a previous week of robust buying activity, especially at both the short and long ends of the OMO curve. Yields declined by 31 basis points (bps) to 25.53% and 25 bps to 23.49% respectively at these ends.
For the medium-term bills, yields contracted by 30 bps to 24.64%, resulting in a negligible increase in average yield to 24.70%, up from 24.69% a week earlier, according to Coronation Research. Analysts see this development as part of the CBN’s continued efforts to tighten monetary conditions and manage inflationary pressures in the economy.
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