(3 minutes read)
· Central Bank of Nigeria’s (CBN) Director of Monetary Policy, Hassan Mahmud said that the Bank would phase out the offering to non-residents the Open Market Operations ( OMO) bill after the settlement of current obligations. There is no clarity as to when this new system would come into operation
· Analysts are wondering how this could help the country when foreign portfolio investments form an important plank of the foreign exchange accrual for the country.
· At the current outstanding OMO obligation of N1.66tn, the CBN would require a little over 6.24% of its external reserves (US$34.99bn) as of March 1 2021, to offset FPIs portion of after maturities
Central Bank of Nigeria’s (CBN) Director of Monetary Policy, Hassan Mahmud said that the Bank would phase out the offering to non-residents of the Open Market Operations ( OMO) bill after the settlement of current obligations. There is no clarity as to when this new system would come into operation.
This will end an era marked by a desperate chase for dollars. Analysts are wondering how this could help the country when foreign portfolio investments form an important plank of the foreign exchange accrual for the country. It may be recalled that offering to non-residents OMO had commenced as a backdrop of the 2015 oil-price collapse and the Bank offered attractive rates, which peaked at 18.6% on the 358days instrument in 2018 for non-residents.
Analysts believe that if implemented it would bode well for CBN since average size of holdings (OMO) has averaged 53% in the last two years. At the current outstanding OMO obligation of N1.66tn, the CBN would require a little over 6.24% of its external reserves (US$34.99bn) as of March 1 2021, to offset FPIs portion of after maturities. That would augur well for the country in maintaining macroeconomic stability.
