The Central Bank of Nigeria sold N11.52tn Treasury Bills through the Open Market Operation in nine months, investigation has shown.
OMO is principally used to mop up or inject liquidity into the system as a strategy for monetary management by the CBN.
It remains the main tool for liquidity management, complemented by discount window activities, reserve management and interventions in the foreign exchange market.
The apex bank in the first quarter intensified OMO sales, but it was bearish in the second quarter and bullish towards the end of September.
Investigation revealed that the CBN in the first quarter sold an accumulative N7.5tn T-Bills through OMO but it dropped by 73.7 per cent to N1.98tn in Q2.
In Q3, a total of N2.02tn worth of T-bills was sold via OMO.
The Managing Director, Enterprise Stockbrokers, Rotimi Fakayejo, attributed the mop up by the CBN to 2019 elections.
He said, “The CBN maintained tight naira liquidity during the period of the 2019 elections in a move to mitigate demand pressures on the naira through frequent OMO sales.”
The Managing Director, Cowry Asset Management Limited, Mr Johnson Chukwu, said, activities in Q1 2019 led CBN to increased OMO sales, stressing that the move was to stabilise liquidity.
He said, “In the period under review, there was a lot of liquidity in the economy due to 2019 general elections. The CBN was trying to mop up in order to manage the level of liquidity.”
The breakdown revealed that N2.38tn T-bills was sold through OMO in January but it increased to N2.45tn and N2.7tn in February and March, respectively.
Our correspondent gathered that the CBN sold N526.5bn worth of OMO in April; N973.9bn in May and N476.5bn in June.
Meanwhile, the CBN sold N475bn in July; N136.7bn in August and N1.4tn in September.
Chukwu explained that there were a lot of maturities in September.
He said, “There was a lot of rollover in September. That is why the number increased. The CBN had to sell Treasury Bills through OMO in order to pay.”
Analysts explained to our correspondent that T-Bills market closed September on a bullish note, as demand for bills across the T-Bills curve.
According to analysts at Zedcrest Capital, demand will persist once the market resumes trading this week supported by healthy system liquidity.
“However, the CBN may ramp up aggressive mop-up auctions to manage excess liquidity, increasing the chance for multiple OMO auctions per week,” they explained in a latest report.
Meanwhile, as the CBN was selling T-bill through OMO, it was also repaying.
Our correspondent gathered that within the period under review, the CBN offset the matured T-Bills worth N9.58tn.
The CBN in September repaid N1.85tn worth of OMO as against N876.4bn and N274.9bn in August and July, respectively.
Further findings disclosed that the apex bank repaid OMO worth N462.5bn in June and N574.89bn in May.
The highest OMO repayment by the CBN was in February while the lowest was in April. The CBN repaid N2.67tn worth of OMO in February and N118.65bn in April.
However, N2.09tn OMO repayment was made by the CBN in January while in March a total of N656.08bn worth of OMO was repaid.
The CBN in its 2018 results explained that the total CBN bills offered at OMO was N34.6tn while the public subscription and sale amounted to N24.9tn and N22.35tn, respectively compared with N12.86tn, N12.23 and N11.15tn offered, subscribed and sold, respectively, in 2017.