The Central Bank of Nigeria (CBN) kicked off 2025 with its first Open Market Operation (OMO) auction, attracting massive investor interest as subscriptions overshot the ₦500 billion offer by a staggering ₦1.1 trillion.
The auction forms part of the apex bank’s efforts to manage liquidity and attract foreign inflows into the economy.
At the auction, stop rates for the 350-day and 364-day tenors settled at 23.81% and 23.84%, respectively. These figures marked a marginal decline from December 2024 rates, which were 23.93% for the 258-day tenor and 23.95% for the 365-day tenor. The reduction in rates reflects a competitive bidding environment and the CBN’s liquidity management strategy.
Despite this strong demand, the secondary market for OMO bills experienced bearish trading sentiment. Spot rates continued to decline, even as inflationary pressures persisted, with the average yield in the OMO segment rising by 7 basis points to 27.6% at the close of trading.
Market analysts attribute the robust subscription levels to strong liquidity in the money market, which has spurred increased investor activity. Expectations remain high that investors will continue bargain-hunting, capitalising on favourable market conditions to maximise returns.
The oversubscription of the CBN’s OMO bills underscores investor confidence in the Nigerian financial market despite inflationary challenges. However, it also highlights the delicate balancing act faced by the apex bank in managing liquidity, stabilising the naira, and addressing rising inflation.
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