The Central Bank of Nigeria (CBN) will undertake open market operations (OMO), giving investors the option to gamble on new bills.
The monetary authority will sell OMO bills worth N500 billion across conventional maturities in a move to encourage FX inflows from overseas investors. The OMO bill was priced at 24.44% at the primary market auction last week, where the CBN raised a total of ₦254.90 billion.
After the monetary policy rate was set higher at its just finished meeting, spot rates on short term instruments have soared. Analysts are anticipating that spot rates across standard maturities could be priced higher at the end of auction to entice overseas portfolio investors.
The auction is however expected to tighten the financial system liquidity further, and shift money market rates to double digits high. “We anticipate that interbank rates will increase as the CBN plans to sell ₦500 billion worth of OMO securities”, AIICO Capital Limited said in a note.
