The Central Bank of Nigeria (CBN) withdrew N4.72 trillion from the banking system through four Open Market Operations (OMO) auctions conducted on August 26 and 27, 2026, as investors continued to show strong appetite for high-yielding government securities.
The short-dated instruments offered by the apex bank attracted yields of almost 20 per cent, with total subscriptions reaching N8.62 trillion against a combined offer of N2 trillion.
The development underscores the strong demand for fixed-income instruments amid the prevailing high-interest-rate environment.
The four OMO auctions covered maturities of 96, 97, 132 and 152 days.
The 97-day instrument offered on August 26 recorded subscriptions of N783.49 billion against N500 billion on offer, with N613 billion eventually allotted at a final rate of 19.90 per cent.
The 132-day instrument attracted the strongest subscription on the first day, receiving N3.478 trillion in bids, representing almost seven times the N500 billion offer. The CBN allotted N2.183 trillion at a final rate of 19.65 per cent.
On August 27, investors subscribed N1.067 trillion for the 96-day OMO against N500 billion offered, although only N160.46 billion was allotted. The instrument cleared at 19.85 per cent.
The 152-day OMO recorded N3.294 trillion in subscriptions, or 6.59 times the amount offered, with N1.768 trillion allotted at 19.32 per cent.
Despite offering lower yields, the longer-dated instruments attracted the bulk of investor demand. The 132-day and 152-day papers jointly attracted N6.77 trillion in subscriptions and accounted for N3.95 trillion of the total allotments.
OMO mop-up offsets liquidity injection
The aggressive OMO sales came as significant liquidity entered the banking system through repayments of maturing government securities.
Primary market repayments amounted to N4.302 trillion over the two days, comprising N2.321 trillion on August 26 and N1.981 trillion on August 27.
However, primary market sales on August 27 withdrew N762.89 billion, leaving a net liquidity injection of N3.539 trillion.
After offsetting this injection against the N4.724 trillion withdrawn through OMO sales, the banking system recorded an estimated net liquidity withdrawal of N1.185 trillion during the period.
Despite the liquidity absorption, the banking system remained relatively liquid. Opening balances of banks and discount houses stood at N169.55 billion on August 26, rose to N223.89 billion the following day and eased to N194.76 billion on August 28.
The CBN’s Standing Deposit Facility also held N3.42 trillion as of August 28, indicating that substantial excess liquidity remained in the financial system.
CBN sustains aggressive liquidity sterilisation
The latest OMO operations add to the CBN’s intensified efforts to manage excess liquidity in the financial system.
The apex bank had already withdrawn N7.18 trillion through OMO auctions in July, making the latest N4.72 trillion mop-up part of a broader pattern of aggressive liquidity sterilisation.
The expansion of access to OMO bills to individuals and other eligible investors through banks has also broadened the investor base and contributed to persistent oversubscription at recent auctions.
With N2.25 trillion in additional OMO maturities expected and N3.42 trillion still held under the Standing Deposit Facility as of August 28, liquidity conditions could remain supportive in the near term.
However, further OMO issuances and a planned N700 billion Treasury Bills auction could absorb some of the excess liquidity as the CBN maintains its sterilisation drive into September.
