Wednesday, 15 May 2013

Central Bank Sells N134 Billion Treasury Bills

The Central Bank of Nigeria (CBN) Monday sold a total of N133.885 billion treasury bills through its open market operations (OMO).
The breakdown of the fixed income instrument showed that while the central bank offered a total of N86.709 billion in a 178-day tenor treasury bills, it also sold a total of N147.177 billion in 164-day bills.
The 178-day tenor bill was oversubscribed to the tune of N103.072 billion at the rate of 12.35 per cent. Similarly, the 164-day tenor was oversubscribed as banks and discount houses staked a total amount of N48.561 billion at 12.30 per cent.
OMO is a monetary policy instrument used for the discretionary selling and buying of eligible securities in the money market by the central bank, in order to regulate the cost and availability of credit so as to achieve the  desired level of money stock or macroeconomic objective.
Central banks engage in OMO in order to regulate the cost and availability of credit and thereby influence the banking system credit ability hi the economy so as to achieve economic stability and desired level of money supply.
In line with its desire to contain inflation, the CBN had resuscitated the OMO market to reduce liquidity in the system.
The CBN Governor, Mallam Sanusi Lamido Sanusi, has never hidden his disdain for double-digit inflation rate.  The CBN had also sold a total of N63.512 billion OMO last Friday.
Meanwhile, the naira was stable at the central bank’s regulated Wholesale Dutch Auction System (WDAS) yesterday as it maintained its value of N155.75 to a dollar. Whereas the CBN offered a total of $300 million, only $294 million was purchased by the 17 banks that participated in the auction.
The local currency was also stable at the interbank market where it closed at N157.45 to a dollar. Similarly, the naira closed at N159.50 to a dollar at the Bureau De Change segment of the market.

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