CBN Governor, Sanusi Lamido Sanusi
In line with its restrictive monetary policy, the Central Bank of Nigeria (CBN) Wednesday sold securities worth N140.339 billion through its open market operation (OMO).
The OMO is a monetary policy instrument which the central bank uses to control the supply of money in the system by buying or selling securities in the open market. By selling securities at the OMO, the apex bank withdraws the volume of money in circulation.
According to report made available to THISDAY, the CBN offered a total of N120 billion securities which was oversubscribed.
Specifically, the apex bank offered N50 billion for 120-day tenor instruments and N70 billion for 127-day instruments. The instruments are expected to mature on May 2, 2013 and May 9, 2013 respectively.
While the subscription for the 120-day tenor was N114.856 billion, the apex bank only sold a total of N50.275 billion. In the same vein, while the subscription for the 127-day tenor was N155.314 billion, total sale stood at N90.064 billion. The stop rates were 13.2990 per cent and 13.340 per cent respectively.
Country Treasurer and Head of Fixed Income Currencies and Commodities, CitiBank Nigeria Limited, Mr. Akinsowon Dawodu, said the financial market had continued to witness strong portfolio inflow into the equity and fixed income markets.
He added: “The bond market was dominated by the FGN bonds in 2012. The addition of FGN bonds to the JP Morgan Emerging Market Government Bond Index saw a strong rally with yields ultimately dropping by over 400 basis points by year end.
“Offshore interest in Nigerian government bonds picked up sharply in the second half and this was the primary cause of the sharp rally in price (and simultaneous drop in yields) described above. In all, incremental offshore flows of around $1.5bn were expected as a result of Nigeria’s inclusion in this index.”
Meanwhile, the Nigerian Interbank Offered Rates (NIBOR) fell at the end of trading on the first business session in 2013 held yesterday.
Findings showed that while the overnight tenor dropped to 10.50 per cent yesterday, from 10.58 per cent on Monday, the 7-day tenor also reduced to 11.17 per cent yesterday, from 11.37 per cent on Monday. Also, just as the 30-day tenor declined to 12.54 per cent yesterday from 12.96 per cent on Monday, the 60-day tenor also reduced to 12.96 per cent.