The Central Bank of Nigeria (CBN) took decisive steps to regulate liquidity in the banking sector on Monday, issuing ₦600 billion worth of Open Market Operation (OMO) bills to local banks and foreign portfolio investors at a high-demand auction.
The move was designed to counterbalance the effect of an expected ₦984.22 billion inflow from maturing OMO instruments scheduled for Tuesday, which threatened to inject excess liquidity into the financial system. The auction, targeting both Nigerian banks and foreign investors, was announced as part of the apex bank’s broader strategy to redirect short-term interest rates and maintain monetary stability.
According to financial analysts, recent inflows from the Central Bank’s standing repurchase agreements (SRAs)—a key monetary policy tool to influence overnight lending rates—further elevated system liquidity by Friday. This development prompted the CBN to act swiftly, deploying cash reserve ratio (CRR) debits along with a fresh ₦600 billion OMO issuance across medium-term instruments.
The auction was met with enthusiastic participation, drawing in total bids worth ₦1.146 trillion and resulting in an allotment of ₦1.127.6 trillion. The OMO bills were offered in two tenors—106 and 169 days—with an overall bid-to-offer ratio of 1.9x, signifying healthy demand.
In the secondary market, investor activity pushed average yields on OMO instruments down by 24 basis points, settling at 26.2%. The decline was driven by aggressive bargain hunting, reflecting growing investor confidence in short-term debt securities despite prevailing macroeconomic uncertainties.
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