CBN Raises ₦3.32 Trillion Via OMO Auctions In June As Interest Rates Soar To 26.64%

The Central Bank of Nigeria (CBN) ramped up its monetary tightening measures in June by selling Open Market Operation (OMO) bills worth a total of ₦3.32 trillion to domestic and foreign investors. This move was aimed at curbing excess naira liquidity and encouraging foreign currency inflows from offshore investors

In an aggressive effort to mop up liquidity, the apex bank conducted three separate auctions during the month, offering approximately ₦600 billion at each event. The sales nearly doubled from previous auction volumes, signaling the CBN’s continued resolve to stabilize monetary conditions.

These operations, according to auction data, attracted significant US dollar inflows and tested multiple maturities across short and long tenors. Given the rapid pace at which existing OMO notes are maturing, market analysts forecast that more issuances will follow in the second half of the year. In total, over ₦7 trillion in OMO instruments were issued in Q2.

Market experts say the renewed issuance drive will allow investors to reinvest maturing funds and help maintain tighter liquidity conditions in the banking system. However, analysts at Verto FX Limited caution that a recent uptick in M2 suggests some offshore investors may be repatriating funds back into foreign currency following the expiry of their OMO holdings.

AIICO Capital Limited noted that despite starting June with robust liquidity, the CBN persisted with its tightening approach, offering over ₦1.8 trillion in OMO bills and ultimately allotting ₦3.32 trillion. This contributed to a temporary spike in rates, with yields breaching the 32% mark before stabilizing due to periodic inflows from maturing OMO bills, Treasury coupon payments, FAAC allocations, and derivation funds to states.

While Treasury bill yields dipped slightly during the month on increased investor demand, trading in the secondary market was mixed, initially opening on a subdued tone before picking up later in the month.

In early July, the CBN conducted a fresh auction where its 260-day note drew significant attention, with ₦745.40 billion allotted at a rate of 23.99%. Meanwhile, the 113-day bill was undersubscribed and saw no allocation.

As inflation shows signs of cooling, analysts anticipate that the CBN’s Monetary Policy Committee (MPC) might soon begin a cautious cycle of rate cuts to stimulate broader economic activity.