The Central Bank of Nigeria (CBN) significantly increased its Open Market Operations (OMO) sales to N18.79 trillion in the first quarter of 2026, representing a sharp 426 per cent rise from N3.57 trillion recorded in the same period of 2025.
Latest financial data released by the apex bank show that despite the surge in gross sales, higher repayments moderated the overall liquidity impact, with net OMO sales declining to N1.81 trillion from N2.01 trillion year-on-year.
The figures indicate a more active but measured liquidity management approach by the CBN, as it intensifies interventions in the money market while allowing more matured instruments to flow back into the financial system.
Data breakdown shows that OMO repayments rose sharply by about 990 per cent to N16.98 trillion in Q1 2026, compared to N1.56 trillion in the corresponding period of 2025.
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Monthly, OMO activity remained volatile. January recorded N8.54 trillion in sales and N5.63 trillion in repayments, while February saw repayments exceed sales. March closed with a net liquidity withdrawal of approximately N1.97 trillion.
Analysts say the pattern reflects a dynamic and calibrated strategy aimed at stabilising liquidity levels amid inflationary pressures and exchange rate concerns.
Further insights from market data highlight a divergence between primary issuance and secondary market activity. While the CBN reported N18.79 trillion in OMO issuances, the FMDQ Securities Exchange recorded N59.45 trillion in OMO bills turnover within the same period, underscoring strong secondary market trading.
Market experts attribute this gap to the frequent trading of OMO instruments, which are increasingly dominating Nigeria’s fixed-income market due to their short tenor and high liquidity.
An analyst at Agusto & Co, Olubunmi Ayokunle, said the disparity reflects an active secondary market where instruments are traded multiple times, rather than any inconsistency in data reporting.
Similarly, the Chief Executive Officer of ECL Asset Management, Charles Fakrogha, noted that the rise in OMO issuance points to periods of excess liquidity, prompting the CBN to intensify its liquidity mop-up operations.
He explained that while tighter liquidity helps curb inflation and stabilise the naira, the monetary authority must also balance growth objectives, especially as Nigeria targets a larger economy.
Experts also note that elevated OMO yields—reportedly as high as 21.9 per cent for short-term instruments—are being used to attract and retain foreign portfolio investment amid global market volatility.
They warned that a premature reduction in rates could trigger capital outflows and exert pressure on the exchange rate.
The development comes as Nigeria’s 2026 budget projects a deficit of N20.12 trillion, with a significant portion expected to be financed through domestic borrowing, increasing reliance on short-term instruments such as OMO bills and Treasury Bills.
Analysts caution that while the strategy supports liquidity management, it could push borrowing costs higher and crowd out private sector credit, while also exposing the economy to refinancing risks.
Overall, market participants say the evolving interplay between OMO issuance, repayments, and trading activity reflects ongoing adjustments within the financial system, with close attention on the CBN’s next policy moves and their implications for inflation, growth, and investor confidence.
