CBN to mop up money in circulation with fresh open market operations

THE Central Bank of Nigeria (CBN)has revealed plans to mop up excess liquidity (cash in circulation) through another round of open market operations (OMO). 

The CBN Governor, Olayemi Cardoso, disclosed the plan on Friday, November 24, in Lagos at the Chartered Institute of Bankers of Nigeria’s 58th annual dinner and the Institute’s 60th anniversary.

Open market operations is a monetary policy tool the apex bank uses to control money in circulation and inflation.

“Recently, an OMO auction was conducted by the apex bank, with a stop rate of 17.5 per cent for the one-year tenor, attracting an oversubscription of N350 billion,” he said.

He also disclosed that the apex bank offered N108.1 billion worth of treasury bills with three tenors to the investing public, which can help reduce liquidity in the banking system and support government fundraising.



    Available data from the CBN states that the currency in circulation increased by 3.75 percent to N2. 76 trillion in September 2023 from N2. 66 trillion in the previous month. On a year-on-year basis, it declined by 14.6 percent.

    Cardoso also said that sustained cash reserve requirement (CRR) debits had moderated liquidity in September and October 2023.

    “Liquidity in the entire banking sector has been significantly reduced to under N100 billion in November,” he said.

    A report by Afrinvest Securities Limited shows that activity in the money market significantly increased in the week that ended the month of November, as the CBN floated a series of OMO auctions as well as the scheduled T-bills primary market auction to curtail the expected boost to system liquidity from Federal Account Allocation Committee (FAAC) inflow (N405.6bn), coupon payment and maturing instruments.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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