The Central Bank of Nigeria (CBN) has offered N2 trillion in Open Market Operations (OMO) bills to absorb excess liquidity in the banking system, after commercial banks’ deposits at its Standing Deposit Facility (SDF) surged to more than N6 trillion.
The offer, announced for October 22, comprises N1 trillion each in 138-day and 180-day bills, maturing on March 9 and April 20, 2027, respectively.
The auction came amid substantial repayments on maturing CBN securities, which have returned liquidity to the banking system. The Financial Markets Dealers Association had projected N2.067 trillion in OMO maturities for the week beginning October 19.
Banks’ net placements at the CBN’s deposit window rose above N6 trillion following an approximately N2.41 trillion OMO repayment on October 13. Banking system liquidity subsequently increased by 69.39 per cent to N6.283 trillion in the week ended October 16, from N3.709 trillion previously.
The latest offer is close to the projected weekly maturities, suggesting the CBN is seeking to withdraw some of the liquidity returning to the financial system. However, the actual impact will depend on the volume of bills allotted, rather than the amount initially offered.
At its October 6 auction, the apex bank allotted approximately N3.31 trillion against an initial offer of N2 trillion, while subscriptions reached N3.51 trillion.
The CBN had also sold N17.51 trillion in OMO bills in September against N10.89 trillion in maturities, resulting in a net withdrawal of about N6.62 trillion.
The latest auction therefore represents another effort to manage excess liquidity while providing an indication of investors’ appetite for short-term monetary instruments and the direction of market yields.
