MAINTAINING ITS MONETARY POLICY ACTION, CBN CUTS OMO, PRIMARY MARKET AUCTIONS TO N2.99TRN

Holdings, Mr. Wole Adeyeye said the CBN’s weak activities in OMO market was due to slow economic activities, stating that banks were concerned about lending to the real sector as demanded by the regulating body.

He explained further that, “We are witnessing weak activities in the money market and OMO market auction shouldn’t be an exception.”

Analysts at Coronation Research in their markets in review, Fixed

Income Gains in Q1 2022’ report noted that Nigeria’s money markets in the Q1 2022 proved to be liquid with the result that institutional investors subscribed in high volumes to Nigerian T-bill and Federal Government auctions; “and they were equally active in the secondary markets.”

According to the report, “the overall the secondary market yield for a 1-year T-bill fell by 0.76 per cent (to 4.48 per cent per annum) while the secondary market yield for the average of our basket of FGN bonds fell by 1.61per cent (to 10.21per cent pa).

“The CBN had restricted Nigerian corporates, and individuals access to the OMO market, also, banks were not allowed to buy T-bills on behalf of borrowing customers. OMO bills had attracted a juicy interest rate of about 15per cent per annum making them one of the most sought-after securities in Nigeria and indeed emerging markets explaining why foreign investors hold nearly half the size.”

In addition, analysts at Guaranty Trust Holding Company Limited (GTCO) in their economic outlook for 2022 said: “Going into 2022, the general build-up to the 2023 Elections will very likely result in a system awash with liquidity.

“We believe that the apex bank will tighten the system from the second half of the year just as political campaigns start, to mop-up excess liquidity from the system. Although it is unlikely that the CBN will slow down on its discretional CRR debits, we expect more banks to approach the apex bank for the release of a portion of their ‘excess’ CRR to assist them in funding their transactions, payment of regulatory levies/fees, etc.”