The pursuit of price stability and by extension, economic stability is behind the persistent liquidity mop up in the last 60 days, which has reached N1.3 trillion.
The Central Bank of Nigeria (CBN), has in the period under review, raised its frequency in using the Open Market Operations (OMO) auctions, like treasury bills to control the quantity of money in circulation.
Consequently, the moves have also led to varying degrees of impacts on the exchange rates, interest rates, inter-bank lending rates, inflation and foreign direct investments.
The interventions, described by traders as an aggressive efforts to push interest rates higher and attract foreign capital — foreign portfolio and direct investments — is only N40 billion short of the total value of auctions throughout the second half of 2015.
According to an economist in one of the nation’s top five banks with international presence, it shows CBN’s awareness of the declining fortunes of the economy and its readiness to stimulate foreign investments’ inflow to the country and reduce external sector pressures.
At the weekend, the two interbank lending instruments- Open Buy-Back (OBB) and Overnight rates, rose further to 23 per cent and 25.6 per cent as system liquidity closed the week at N70.6 billion.