In its latest move to further rein in inflation, the Central Bank of Nigeria (CBN) has unveiled plans to mop up a total of N200.322 billion from the Nigerian banking system through a special Open Market Operation (OMO) at the rate of 16 per cent per annum.
This is coming on the heels of Lagos Chamber of Commerce concern over the increasing liquidity challenges in the financial system. It had said that some companies are not able to draw from facilities to fund their forex requirements. This is taking a toll on the business of these companies as some of them cannot provide the cash backing for forex demands. The liquidity problem is a consequence of the mopping of liquidity in the financial system, the tight monetary policy stance and the increasing crowding-out effect of the private sector by government borrowing in the financial system. Council stress the need for financial system liquidity to be relaxed.
But rising from a meeting of the Bankers’ Committee in Lagos, June 15, 2017, the CBN said its decision to mop up liquidity was in reaction to the maturity of N206 billion on Thursday, June 15, 2017. Disclosing this to newsmen, the Bank’s Acting Director in charge of Corporate Communication, Isaac Okorafor, further explained that the apex Bank decided on the rate of 16 per cent per annum due to the falling rate of inflation, which he noted will continue to fall. It will be recalled that the Bank on Monday, June 12, 2017 released its Treasury Bills Issue Programme for the third quarter of 2017 in which it disclosed that the maturity dates for the various tenors will be June 15, June 22, July 6, July 20, August 3, August 17 and August 31, 2017, respectively.
