CBN Withdraws N64.7bn Idle Funds
Economy
By Ayodele Aminu
In spite of the nationwide strike called by the Nigeria Labour Congress (NLC) last week to protest against the increase in the pump price of fuel, the Central Bank of Nigeria (CBN) still succeeded in mopping up a total sum of N64.769 billion idle funds from the economy through the sale of treasury bills to banks, discount houses and the investing public.
This figure indicates a slight increase of 5.5 per cent or N3.354 billion against the N61.414 billion withdrawn from the system a fortnight ago. The surge may have also indicated that some funds came into the money market last week as banks stepped up efforts to cover their positions to ensure that they do not run into debits with the CBN.
The government securities trading comprising the Primary Market Auction (PMA) and the Open Market Operations (OMO) are one of the windows through which the CBN controls the amount of liquidity in the system. This, it does by selling bills through which the Federal Government borrows indirectly from banks, thereby mopping their excess funds.
A breakdown of the amount mopped up from the economy last week shows that N3.85 billion, N1.9 billion and N1 billion were withdrawn on Monday, Tuesday and Wednesday respectively through the daily OMO, while the remaining N58.018 billion was mopped up through the PMA.
At Monday's OMO where bills with life span of 28 days and maturity date of July 5, 2004 were sold, all the N3.850 billion bills received were allotted at the issue and bid rates of between 14.2400 - 14.2500 per cent apiece. The true yield stood at 14.4070 per cent, while bills amounting to N11. 166 billion matured for repayment putting the net sales/purchase at N7.316 billion.
At Tuesday's daily OMO where bills with life span of 28 days and maturity date of July 6, 2004 were sold, all the N1.9 billion bills received were sold at the issue and bid rates of 14.2500 per cent apiece, while the true yield stood at 14.4070 per cent.
No bills however matured for repayment, putting the net sale/purchase position N1.9 billion.
At Wednesday's OMO where bills with life span of 28 days and maturity date of July 7, 2004 were sold, all the N1 billion worth of bills received were allotted at the issue and bid rates of 14.2500 per cent apiece. The true yield also stood at 14.4070 per cent, while bills worth N50 million matured for repayment. The net sale/purchase position therefore stood at N950 million.
At Thursday's OMO where bills with life span of 28 days and maturity date of July 8, 2004 were sold, no bills were received but bills that matured for repayment amounted to N5.111 billion. The net sales/purchase therefore stood at N5.11 billion.
At Friday's daily OMO where bills with life span of 28 days and maturity date of July 9, 2004 were sold, no bills were received.
At Thursday's Primary Market Auction - a 91 days tenured investment with September 9, 2004 as its maturity date, bills worth N58.018 billion were purchased out of the N60.000 billion bills offered for sale at the issue and bid rates of between 13.5000 - 14.9500 per cent per annum apiece. The true yield stood at 15.0431 per cent per annum, while bills amounting to N50.018 billion were repaid, putting the net sales (purchase) position at N7.399 billion.
Minimum Rediscount Rate (MRR) that is the nominal anchor of all interest rates in the economy however, remained unchanged at 15 per cent per annum.
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