Investors in the open segment of the capital market on Friday oversubscribed the N1 trillion Federal Government securities put for sale by the Central Bank of Nigeria (CBN).
The sale, which is part of the apex Bank’s short-term instruments adopted to manage liquidity flow crisis in the economy was successfully concluded with the issuance of N1.053 trillion (about $680 million).
“The CBN offered N500 billion at the Open Market Operations (OMO) auction and over-subscribed, selling N1.053 Trillion, with 79 percent of the total bids, or the equivalent of $530 million, coming from foreign investors,” the bank said in a statement.
Friday’s auction was the first since the CBN’s Monetary Policy Committee (MPC) meeting, which adjusted key monetary policy parameters to a new high levels.
At the end of the recent MPC meeting in Abuja, the controlling monetary policy rate (MPR), also known as the lending rate, was raised by 400 basis points to 22.75 percent, from 18.75 percent and the asymmetric corridor around the MPR adjusted to +100/-700 from +100/-300 basis points.
Also, the Committee raised the Cash Reserve Ratio (CRR) from 32.5 percent to 45.0 percent, while retaining the Liquidity Ratio at 30 percent.
Financial experts have crticised the decision, describing it as an overkill of the country’s economic stability.
But, the CBN said in the statement on Sunday that its Governor, Olayemi Cardoso, used used the outcomes of the MPC meeting and a virtual meeting with foreign portfolio investors recently to set a detailed strategy to curb inflation, stabilise the exchange rate, and spur confidence in the banking system and economy.
The spokesperson of the apex bank, Hakama Sidi-Ali said Cardoso further highlighted in the meeting with investors an outlook for sustained increases in the CBN’s foreign currency reserves, improved liquidity in the foreign exchange market, and imminent settlement of the remaining backlog of genuine Foreign Exchange transactions by the Central Bank of Nigeria.
“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,” Sidi-Ali quoted Cardoso as saying.
Sidi Ali said the over-subscription of the sale of the government securities development underscored the level of confidence the Bank now enjoyed from investors as a result of the various interventions by the monetary policy authority.
She expressed optimism that the CBN’s monetary policy measures were beginning to yield positive results on the economy.
