CBN raised N6.62 trillion through OMO in September

The Central Bank of Nigeria (CBN) withdrew about 6.62 trillion net liquidity from the banking system through open market operations (OMO) in September 2026, as the apex bank stepped up its use of securities to manage excess liquidity.

An analysis of CBN auction and maturity data showed that the bank sold about N17.51 ​​trillion of OMO securities in five auctions held on September 1, 8, 16, 24 and 29.

However, about N10.89 trillion in maturing OMO bills were repaid during the month, meaning that about 62% of the value of new bills sold was effectively offset by the return of funds to the financial system.

The resulting net withdrawal of approximately 6.62 trillion naira represents approximately 38% of the CBN’s gross OMO sales.

The development highlights the extent to which the CBN uses OMO instruments not only to sterilize excess liquidity but also to refinance maturing securities and extend the maturity profile of its liabilities.

The five auctions produced sales of N2.88 trillion, N4.40 trillion, N3.29 trillion, N2.255 trillion and N4.686 trillion respectively.

On September 1, the CBN sold N2.88 trillion against a September 7 maturity of N62 billion, resulting in a net absorption of about N2.82 trillion.

Similarly, the September 8 auction generated N4.40 trillion in sales against N3.07 trillion in maturities, producing a net absorption of about N1.33 trillion.

Transactions around September 15 and 16 generated a much smaller net withdrawal of about N236 billion, with N3.29 trillion in sales reported against N3.06 trillion in redemptions.

Meanwhile, the September 22/24 transactions resulted in a marginal liquidity injection of approximately $15 billion.

The final auction on September 29 again produced a substantial pullback, with N4.686 trillion in OMO sales versus N2.433 trillion with maturities on the same day, leaving a net absorption of about N2.25 trillion.

Investor appetite for CBN OMO instruments remained strong despite the decline in stop rates during the month.

The new 266-day OMO bill, which expires in 2027, attracted N4.543 trillion in subscriptions against an initial offering of N1 trillion, representing demand of about 4.54 times the amount offered.

The bill passed at 16.23%, with the CBN allocating $2.996 trillion.

The 182 and 147 day instruments settled at 16.94% and 17.24% respectively.

In the five September auctions, total subscriptions reportedly reached around 27 trillion naira, up from 18.72 trillion naira recorded in August.

The strong demand suggests that banks and other investors continued to find CBN stocks attractive even as yields moderated.

Financial analysts said the size of the September transactions should not be interpreted as a one-way withdrawal of $17.51 ​​trillion from the banking system because a substantial portion of the amount represented the rollover or replacement of maturing securities.

According to them, “OMO gross sales can be misleading when there are significant expirations in the same period. What matters for liquidity conditions is the difference between what is withdrawn and what is returned.”

Experts note that the combination of substantial demand for OMOs and more than $6.2 trillion reportedly held by the Standing Deposit Facility (SDF) as of September 29, points to a banking system that still had significant investable liquidity.

The CBN’s decision to issue longer-dated instruments could also have implications for future liquidity conditions because more funds would remain locked up until 2027 rather than returning to banks in the short term, they said.

Financial industry players say the deals are significant because the Apex Bank’s management of excess liquidity can influence short-term interest rates, money market conditions, bank lending and, indirectly, inflationary pressures.

Prolonged liquidity sterilization could help moderate the naira’s excess liquidity and reduce the possibility of large amounts of idle funds moving into foreign exchange or other speculative assets.

Experts, however, warn that an aggressive withdrawal of liquidity could also increase funding costs for financial institutions if sustained for too long.