CBN Sells N676.65 Billion at First OMO Auction in April
Naira continues to strengthen against dollar, reaches N1,262/$1 at official market
The Central Bank of Nigeria (CBN) has intensified efforts to manage money supply by conducting its first Open Market Operations (OMO) auction in April 2024 and selling N676.65 billion in the process.
There was significant interest from investors in the 363-day OMO auction by CBN, with subscriptions reaching N1.16 trillion, thus oversubscribing the N350 billion bills offered.
The apex bank sells the OMO bills at a high of 21.13per cent, marking it another record high for the institution as it determined to tackle inflation rate and stabilise the local currency. The CBN's total sales for the 365-day OMO auction stood at N652.40 billion.
The 188-day bill also had N75 billion on offer, but saw a lower subscription of just N20.25 billion, with a stop rate of 19.5 per cent and only N7.25 billion sold.
For the 97-day bill, N75 billion was made available, with N17 billion subscription by investors at a stop rate of 19 per cent. The CBN, however, sold N17 billion on 97-day OMO offered April 3, 2024.
The central bank's aggressive OMO auctions reflect its proactive approach to controlling liquidity in the economy.
By selling bills at high-interest rates, it aims to mop up excess money supply, which is crucial for combating inflation and supporting the exchange rate.
The high interest rates also indicate the central bank's commitment to making Nigerian securities attractive especially to foreign investors, thereby drawing in capital that can help stabilise the financial market.
The auction in April 2024 is the first since the CBN's Monetary Policy Committee raised the Monetary Policy Rate (MPR) to 24.75 per cent in March 2024.
The CBN Governor, Mr. Olayemi Cardoso, had explained strategy to curb v 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.
According to him: “The CBN is committed to supporting price stability by taking the necessary measures to increase liquidity in the foreign exchange markets sustainably.
“Our focus is on building a fully functioning market that al*lows smooth entry and exit for investors.”
For two consecutive weeks, the Nigerian naira has shown resilience against the US dollar, demonstrating gains both at the official and parallel markets.
At the Nigerian Autonomous Foreign Exchange (NAFEM) window, the naira closed at N1262.85/$1 yesterday, a gain from its previous close at N1,278.58/$1 on Tuesday, reflecting a gain of N15.73.
Similarly, on the parallel market, the naira sustained its upward momentum, trading at N1,245/$1 compared to N1,250 exchanged on Tuesday, representing a gain of N5.
The daily turnover saw an increase, reaching $166.18 million yesterday, in contrast to the $111.18 million earlier recorded, indicating a notable surge of 49.4 per cent.
Furthermore, the highest spot rate observed yesterday stood at N1,296, with the lowest spot rate recorded at N1,210.
Meanwhile, for two consecutive weeks, the Nigerian naira has shown resilience against the US dollar, demonstrating gains both at the official and parallel markets.
At the Nigerian Autonomous Foreign Exchange (NAFEM) window, the naira closed at N1262.85/$1 yesterday, a gain from its previous close at N1,278.58/$1 on Tuesday, reflecting a gain of N15.73.
Similarly, on the parallel market, the naira sustained its upward momentum, trading at N1,245/$1 compared to N1,250 exchanged, representing a gain of N5.
The daily turnover saw an increase, reaching $166.18 million yesterday, in contrast to the $111.18 million recorded on Tuesday, indicating a notable surge of 49.4 per cent.
Furthermore, the highest spot rate observed yesterday stood at N1,296, with the lowest spot rate recorded at N1,210.