By Charles Ebi
Central Bank of Nigeria, CBN, absorbed N3.04 trillion from the banking system through a single Open Market Operations, OMO, auction conducted on June 5, 2026, as investor demand across three tenors significantly exceeded the N600 billion offered by the apex bank.
According to analysis of CBN OMO auction results and daily financial market data between June 2 and June 5, 2026, total subscriptions reached N3.275 trillion, representing an oversubscription rate of 5.46 times the amount offered.
The development underscores the CBN’s continued aggressive liquidity sterilisation strategy, even as excess liquidity in the banking system showed some signs of easing during the review period.
The latest auction follows two major OMO sessions in May that collectively absorbed trillions of naira from the financial system.
A breakdown of the June 2 OMO auction results shows exceptionally strong investor appetite, particularly for longer-dated instruments.
The 7-day OMO bill recorded subscriptions of N179 billion against a N200 billion offer, with N169 billion allotted at a stop rate of 21.54%.
The 35-day OMO bill attracted N614.43 billion in subscriptions compared to the N200 billion offered, while the CBN allotted N465 billion at a stop rate of 21.40%.
The 133-day OMO bill emerged as the most sought-after instrument, drawing N2.48 trillion in subscriptions against a N200 billion offer and securing an allotment of N2.41 trillion at a stop rate of 20.02%.
In aggregate, the CBN offered N600 billion, received subscriptions totaling N3.275 trillion, and successfully allotted N3.04 trillion, resulting in a net liquidity withdrawal of the same amount.
The figures indicate that investors continue to channel excess liquidity into CBN sterilisation instruments, with strong preference for longer-tenor securities despite lower yields.
The 133-day bill’s 12.4-times oversubscription ratio highlights growing investor willingness to lock in funds for extended periods amid expectations of sustained monetary tightening.
Additional market activity during the week further reduced liquidity within the financial system.
Primary market operations on June 4 resulted in a net liquidity withdrawal of N992.68 billion, following N1.46 trillion in NTB and FGN bond sales against repayments of N464.60 billion.
Opening balances of banks and discount houses declined from N108.27 billion on June 2 to N45.14 billion on June 3 before settling at N43.92 billion on June 5.
This represents a decline of approximately N64.35 billion, equivalent to a 59.43% reduction over the period.
The Standing Deposit Facility ,SDF, balance moved from N5.29 trillion on June 3 to N5.35 trillion on June 4 before easing to N4.74 trillion on June 5.
The moderation in SDF balances suggests that liquidity conditions are beginning to tighten, although substantial excess funds remain within the banking system.
The data also shows that the CBN continues to rely primarily on OMO auctions and primary market operations for liquidity management during the current monetary policy cycle.
Recent projections indicate that substantial liquidity inflows are expected to enter the banking system during June despite the CBN’s aggressive sterilisation efforts.
Financial Markets Dealers Association ,FMDA, projections estimate total inflows of approximately N10.90 trillion into the banking system during June 2026.
Of this amount, about N7.77 trillion is expected to originate from maturing OMO bills.
The N3.04 trillion absorbed in the June 5 auction represents approximately 27.9% of the projected monthly inflows and effectively sterilised the N2.73 trillion OMO repayment that matured on the same day.
Cumulative OMO sales between January and April 2026 had already reached approximately N30.12 trillion, reflecting an unprecedented pace of liquidity management by the apex bank.
The latest auction reinforces expectations that the CBN’s tightening stance will remain firmly in place throughout the second quarter.
By accepting N2.41 trillion on the 133-day bill alone, the apex bank appears to be extending the maturity profile of its OMO portfolio while reducing the likelihood of large liquidity injections from near-term maturities.
However, the N4.74 trillion SDF balance recorded on June 5 suggests that excess liquidity remains a defining feature of Nigeria’s banking system despite the scale of recent liquidity mop-ups.
