PRICE STABILITY: CBN MOP-UP N2.9TRN IN 7 MONTHS
source : http://www.eyesoflagos.com/2017/08/price-stability-cbn-mop-up-n29trn-in-7.html

To meet its core objectives of price stability, the Central Bank of Nigeria (CBN) in seven months has mop-up estimated N2.9 trillion excess liquidity using the Open Market Operations (OMO) auctions, investigation by EYES OF LAGOS has revealed.
With the CBN introduction of Investors and Exporters Foreign Exchange and Small and Medium Scale enterprises (SMEs) windows, the OMO sales operation has doubled since in April and reached record high of about N779.4 billion in July.
According to EYES OF LAGOS findings, the CBN auctioned N491.5 billion OMO in January but dropped to N407.5 billion in February. In March, the CBN mopped-up N380.2 billion using the OMO and N262 billion and N303 billion in April and May 2017 respectively.
Furthermore, the OMO sales closed at N315 billion, data from CBN website disclosed. OMO is a monetary policy instrument that the CBN used to control the supply of money and the interest rates are always attractive to lure commercial banks and high network investors keep their money with CBN rather than inject them in real sector of economy.
According to CBN, OMO sales have attracted rates between 17.5 per cent and 18.5per cent, a move to keep the foreign exchange stable. So, to deter pressure on the foreign exchange, the CBN sucks out naira from the economy by offering high interest rates believing that the more naira you have available to chase dollars, the lower the depreciation of the naira.
The CBN not only uses OMO but Treasury Bills and federal government bonds to stem inflationary pressure and curtail liquidity arising from maturing bills. However, a group of analysts at Cordros capital said the overnight money market rate contracted week on week by 4,637 basis points to 12.88per cent from last week’s 59.25 per cent.
The report by Cordros capital said, “The prior week started off with a surge in the overnight rate by 4,000 basis points to 99.25per cent on Monday (following reduction in system liquidity as the apex bank sold OMO bills worth N9.39 billion), while it contracted on Tuesday and for the remaining trading days of the week, as the market anticipated the inflow of N168.04 billion via maturing OMO bills (on Thursday) and the refund of excess cash deposited by banks for foreign exchange purchase today.”
The report by Cordros analysts explained that, “While we acknowledge the inflow of N95.66 billion via maturing OMO bills, and likely inflow via monthly budgetary allocations to state and local governments, we expect liquidity to remain pressured as the apex bank continues its aggressive liquidity mop up – in addition to its intervention in the currency space. Thus, we look for the overnight rate trending higher in the coming week.”

phosky:
PRICE STABILITY: CBN MOP-UP N2.9TRN IN 7 MONTHS
source : http://www.eyesoflagos.com/2017/08/price-stability-cbn-mop-up-n29trn-in-7.html

To meet its core objectives of price stability, the Central Bank of Nigeria (CBN) in seven months has mop-up estimated N2.9 trillion excess liquidity using the Open Market Operations (OMO) auctions, investigation by EYES OF LAGOS has revealed.
With the CBN introduction of Investors and Exporters Foreign Exchange and Small and Medium Scale enterprises (SMEs) windows, the OMO sales operation has doubled since in April and reached record high of about N779.4 billion in July.
According to EYES OF LAGOS findings, the CBN auctioned N491.5 billion OMO in January but dropped to N407.5 billion in February. In March, the CBN mopped-up N380.2 billion using the OMO and N262 billion and N303 billion in April and May 2017 respectively.
Furthermore, the OMO sales closed at N315 billion, data from CBN website disclosed. OMO is a monetary policy instrument that the CBN used to control the supply of money and the interest rates are always attractive to lure commercial banks and high network investors keep their money with CBN rather than inject them in real sector of economy.
According to CBN, OMO sales have attracted rates between 17.5 per cent and 18.5per cent, a move to keep the foreign exchange stable. So, to deter pressure on the foreign exchange, the CBN sucks out naira from the economy by offering high interest rates believing that the more naira you have available to chase dollars, the lower the depreciation of the naira.
The CBN not only uses OMO but Treasury Bills and federal government bonds to stem inflationary pressure and curtail liquidity arising from maturing bills. However, a group of analysts at Cordros capital said the overnight money market rate contracted week on week by 4,637 basis points to 12.88per cent from last week’s 59.25 per cent.
The report by Cordros capital said, “The prior week started off with a surge in the overnight rate by 4,000 basis points to 99.25per cent on Monday (following reduction in system liquidity as the apex bank sold OMO bills worth N9.39 billion), while it contracted on Tuesday and for the remaining trading days of the week, as the market anticipated the inflow of N168.04 billion via maturing OMO bills (on Thursday) and the refund of excess cash deposited by banks for foreign exchange purchase today.”
The report by Cordros analysts explained that, “While we acknowledge the inflow of N95.66 billion via maturing OMO bills, and likely inflow via monthly budgetary allocations to state and local governments, we expect liquidity to remain pressured as the apex bank continues its aggressive liquidity mop up – in addition to its intervention in the currency space. Thus, we look for the overnight rate trending higher in the coming week.”

Noted

Mopping up so much money without a correlating increase in investments and infrastructure...The rate a which people are investing in Tbills this days is alarming as it simply means people are becoming lazy investors and the real sector of the economy will suffer. God help us...

Interesting days ahead

But everything is still expensive noting is cheap in Nigeria noting has stabilize

If there is a reduction of the volume of naira in circulation, will it reduce the chase for the dollar or stimulate it?

I guess that the demand for the dollars is not an explicit function of the volume of naira in circulation except when when the cbn takes away its restrictions to dollars assessment that is not for PTA and Investment in foreign purchases purposes.

Price of what exactly.

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Integrityfarms:
If there is a reduction of the volume of naira in circulation, will it reduce the chase for the dollar or stimulate it?

I guess that the demand for the dollars is not an explicit function of the volume of naira in circulation except when when the cbn takes away its restrictions to dollars assessment that is not for PTA and Investment in foreign purchases purposes.

While you have indeed raised a good point here...I believe the CBN reduction of volume of Naira in circulation would reduce the chase for Dollar,as too much Naira won't be available to purchase the Dollar, there by reducing the rate at which the Naira Depreciate compared to the Dollar this I am certain you know would have a positive impact on the exchange rate(It falls in favour of the Naira)...one can sum up the CBN effort as an attempt to defend the naira.

Na wa O, big waa

Integrityfarms:
If there is a reduction of the volume of naira in circulation, will it reduce the chase for the dollar or stimulate it?

I guess that the demand for the dollars is not an explicit function of the volume of naira in circulation except when when the cbn takes away its restrictions to dollars assessment that is not for PTA and Investment in foreign purchases purposes.

I you understand this part, it should answer your question

With the CBN introduction of Investors and Exporters Foreign Exchange and Small and Medium Scale enterprises (SMEs) windows,

Genuine importers have an exchange rate to wire cash to the sellers outside Nigeria.

Most of the traders in Idumota, Nnamdi Azikwe, Plaza, Nnewi, Onitsha, Alaba, ASPAMDA etc are SMEs

biomustry:
Na wa O, big waa

What is waa?

Do you understand what your read or you're just one of the bandwagons that post for notice me sake?

LANDLORD72:
But everything is still expensive noting is cheap in Nigeria noting has stabilize

It has to do with greed and lack of price control mechanism

Financial technicalities.

cbngov01:
Mopping up so much money without a correlating increase in investments and infrastructure...The rate a which people are investing in Tbills this days is alarming as it simply means people are becoming lazy investors and the real sector of the economy will suffer. God help us...

Last Wednesday, I just invested for 180 days, Now I've been offered a property just 5:00am this morning.

Here's is it. The property I was offered to will get me 13.1% annually in terms of rental income, but my TB would give me 17% after 1 year.

Though I would still pay for the property this week.

We tend to look for higher returns

cbngov01:
Mopping up so much money without a correlating increase in investments and infrastructure...The rate a which people are investing in Tbills this days is alarming as it simply means people are becoming lazy investors and the real sector of the economy will suffer. God help us...

Well, any restrictive policy is a double-edged sword. The real sector will suffer because the mopping up has led to high interest rates and with such rates you can't make money in the real sector of the economy. The contractions won't be forever. It's just to defend the weak naira under this current government.

hmmm

cbngov01:
Mopping up so much money without a correlating increase in investments and infrastructure...The rate a which people are investing in Tbills this days is alarming as it simply means people are becoming lazy investors and the real sector of the economy will suffer. God help us...

exactly. no matter how much of the currency you mop up, as long as there is few goods in the economy as a result of money not channelled into deliberate production of goods to balance the money in circulation, it will always lead to inflation.

davodyguy:


What is waa?

Do you understand what your read or you're just one of the bandwagons that post for notice me sake?

seems like you have noticed me

All the noise can never revamp the economy rather, it shrinks the economy. There is need to firstly decrease the interest rate to single digit to motivate people get easy access to lending. Individuals, firms and companies will have more funds at their disposal to invest and diversify productions. Thus, GDP will have a boost and the entire economy would be stimulated.

Government also have to increase funding of infrastructural projects nationwide with a view to improve the economy.

Our monetary policies are unrealistic and dwindling like a pendulum. There should be consistency in this regards in order to strengthen our currency.

cbngov01:
Mopping up so much money without a correlating increase in investments and infrastructure...The rate a which people are investing in Tbills this days is alarming as it simply means people are becoming lazy investors and the real sector of the economy will suffer. God help us...

exactly in this recession chai!!!

folasayolyn:


exactly in this recession chai!!!

happy birthday to u

many happy returns

austine4real:

happy birthday to u


many happy returns

thank you

folasayolyn:


thank you

where is my cake?