The record N1.053 trillion received from Open Market Operations (OMO) sales last Friday is a testament to investors confidence in the Nigerian economy, the Central Bank of Nigeria (CBN) has said.
Last Friday, the CBN offered N500 Billion at the OMO auction in short-term instruments as part of its liquidity management exercise.
But that offer received more than double subscriptions selling finally at N1.053 Trillion, (US$680 million).
About 79% of the total bids, or the equivalent of US$530 million, came from foreign investors, the CBN said in a statement Sunday night.
Friday’s auction was the first since the CBN’s Monetary Policy Committee (MPC) meeting, where worried by the persisting inflationary and exchange rate pressures, the CBN took an aggressive tightening stance, jerking up monetary policy rate MPR further 400 basis points to 22.75 from 18.75%, Cash Reserve Ratio (CRR) from 32.5% to 45%, adjusting the assymetric corridor around the MPR to +100/-700 from +100/-300 basis points, though retained the liquidity ratio (LR) at 30%.
The MPC meeting was later followed by a virtual meeting with foreign portfolio investors.
Olayemi Cardoso, CBN Governor, used both meetings to set a detailed strategy to curb inflation, stabilise the exchange rate, and spur confidence in the banking system and economy.
At the MPC meeting, Cardoso clearly stressed the CBN’s focus on reining in pressures on prices and exchange rate, which would hamper growth if not addressed.
At the later meeting with investors, he further highlighted an outlook for sustained increases in the CBN’s foreign currency reserves, improved liquidity in the foreign exchange market, and assured on imminent settlement of the remaining backlog of genuine Foreign Exchange transactions by the CBN.
“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 allows smooth entry and exit for investors,” he stated.
In a mailed note, Hakama Sidi Ali CBN’s Acting Director, Corporate Communications Department, said the result from the latest OMO sales underscored the level of confidence that the apex bank now enjoy from investors.
She also said the management of the CBN was optimistic that its monetary policy measures were beginning to yield positive results.
