The Central Bank of Nigeria (CBN) has assured investors that it will continue to carry out its liquidity management mandate through the issuance of Open Market Operations (OMO) bills in order to ensure price stability.
The assurance came following the apprehension in the fixed income securities market last week, when the CBN for the first time this year did not carry out its regular liquidity mop-up, through OMO auction, same week that the Debt Management Office (DMO) announced that the N198.032 billion Nigerian Treasury Bills (NTBs) that would mature in December 2017 would be repaid in full at maturity unsettled the market.
This is just as the central bank at the weekend released its Nigerian Treasury Bills (NTBs) Issue Programme for the first quarter of 2018, which showed that a total of N1.08 trillion of bills would be rolled over in the first quarter. A breakdown of the NTBs calendar showed that while N42.011 billion of 91-day bills would be rolled over, N190 billion for 182-day and N848 billion for 364-day bills.
Conversely, a total of N1.067 trillion of 91-day, 182-day and 364-day bills would be maturing in the first quarter of 2018. Treasury Bills and OMO are similar and work almost the same way. Whilst Treasury Bills are issued to finance government budget deficit, OMOs are issued by the CBN for monetary policy management, that is, to control the volume of money in circulation.
The Deputy Governor, Financial System Stability, CBN, Dr. Joseph Nnanna, who spoke with THISDAY, stressed that the central bank had not abandoned OMO, contrary to insinuation in the market. However, Nnanna pointed out that the issuance of OMO bills was usually influenced by the level of liquidity in the financial system.
ThisDay
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