By Babajide Komolafe
The Central Bank of Nigeria (CBN) drastically reduced its liquidity mop up activities through treasury bills by 81 percent, year-on-year, y/y, to N793 billion in the first quarter of the year (Q1’21).
The apex bank, among other things, controls money supply (liquidity) in the economy by issuing or purchasing secondary market treasury bills, also known as Open Market Operations (OMO) when it wants to reduce money supply, while it injects liquidity by purchasing OMO treasury bills.
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Financial Vanguard analysis of OMO auctions conducted in Q1’21 shows a sharp decline in the amounts of bills issued and sold by the CBN compared to the same period of last year (Q1’2020).
The CBN reduced the amounts of OMO bills offered by 80 per cent, y/y, to N858 billion in Q1’21, from N4.26 trillion in Q1’2020.
Similarly, the amount of bills sold fell by…