The Central Bank of Nigeria (CBN) intensified its liquidity-tightening efforts on Monday, absorbing N1.689 trillion from the financial system through an Open Market Operations (OMO) auction, despite initially offering only N600 billion in securities.
Results released by the apex bank showed that investor subscriptions almost tripled the offer size, reflecting sustained appetite for CBN instruments as monetary authorities continue efforts to curb excess liquidity, tame inflation, and support exchange-rate stability.
The auction featured two instruments: an 8-day OMO bill and a 134-day OMO bill, each offered at N300 billion. However, demand was overwhelmingly concentrated on the longer-dated security.
The 134-day bill, which matures on October 20, 2026, attracted N1.604 trillion in subscriptions—more than five times the amount offered. The CBN accepted all bids received, allotting the full N1.604 trillion at a stop rate of 20.02 per cent.
In contrast, the 8-day bill recorded weak demand, attracting only N85 billion in subscriptions against the N300 billion on offer. Although it carried a higher stop rate of 21.89 per cent, investors showed little interest in the short-term instrument. The apex bank nonetheless allotted the entire amount subscribed.
The longer-tenor bill accounted for about 95 per cent of total subscriptions, highlighting investors’ preference to lock in attractive yields over a longer period rather than pursue higher returns on short-term placements.
Market analysts say the pattern suggests expectations that current yield levels may not be sustained indefinitely, prompting investors to secure medium-term returns while they remain available.
By accepting all subscriptions received, the CBN effectively withdrew N1.689 trillion from the banking system in a single operation, reinforcing its aggressive liquidity-management strategy.
Although substantial, the June 8 mop-up was smaller than some of the record OMO auctions conducted in May. On May 21, the CBN absorbed N3.692 trillion after receiving subscriptions more than six times its N600 billion offer. The apex bank also mopped up N1.945 trillion on May 29 and attracted N5.63 trillion in successful subscriptions across three auction sessions earlier in May.
The continued oversubscription of OMO bills indicates that liquidity remains abundant within the banking sector, despite repeated interventions by the CBN. It also underscores the strong confidence of investors in CBN securities as a preferred vehicle for deploying surplus funds.
With inflation control and monetary stability remaining key policy priorities, analysts expect the apex bank to sustain its liquidity-sterilisation operations in the months ahead.
