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Friday 11 October 2024

CBN to Raise N300 Billion in OMO Auction, Spot Rates Expected to Climb


The Central Bank of Nigeria (CBN) is set to raise N300 billion through an Open Market Operation (OMO) auction across standard maturities, with analysts forecasting a rise in spot rates. This follows the CBN's recent benchmark interest rate hike aimed at curbing Nigeria’s persistently high inflation.

While the treasury bills market experienced mixed sentiments, it closed on a bearish note, according to reports from investment banking firms. 

According to AIICO Capital Limited, early demand for 1-year OMO bills, with trades executed around 19.00% to 19.30%. However, market sentiment turned bearish after the CBN’s announcement of the upcoming auction.

As a result, the mid-rate for Nigerian Treasury Bills (NTBs) settled at 21.14%, with analysts expecting the bearish trend to continue throughout the week. The auction is also projected to tighten liquidity, as system liquidity plunged into negative territory, prompting banks to borrow over ₦1 trillion from the CBN’s Standing Lending Facility (SLF).

Consequently, both the Open Repo Rate (OPR) and Overnight Rate (O/N) saw increases, rising by 13 basis points (bps) and 15 bps to 32.03% and 32.40%, respectively.

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