CBN Tightens Liquidity, Mops Up N2.5 Trillion OMO Demand Rise, Naira Falls
- CBN absorbed N2.5 trillion through a heavily oversubscribed OMO auction as investors chase high-yield government-backed securities
- Strong demand pushes total subscriptions to N3 trillion, while stop rates fall below 20% across three maturities
- Liquidity remains tight as the naira slips to N1,331 per dollar despite the CBN’s aggressive monetary intervention
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Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Central Bank of Nigeria (CBN) has intensified its liquidity-tightening drive after absorbing about N2.5 trillion from the financial system through its latest Open Market Operations (OMO) auction, a move that underscores the regulator’s determination to curb excess liquidity and stabilise monetary conditions.
The auction, held on Wednesday, September 16, 2026, attracted overwhelming investor demand, with total subscriptions rising to about N3 trillion, three times the N1 trillion initially offered by the apex bank.
Source: Getty Images
The development comes as the naira continues to face pressure in the foreign exchange market and policymakers seek to keep inflation and liquidity under control through aggressive monetary interventions.
Investors rush CBN securities
The latest OMO auction saw strong participation from banks and institutional investors seeking attractive returns on government-backed securities.
The CBN offered bills across three maturities of 69 days, 90 days and 153 days, but demand far exceeded supply as investors competed for the high-yield instruments.
In response to the strong appetite, the apex bank increased its allotment significantly above the original offer size, eventually selling about N2.5 trillion worth of bills and effectively removing a substantial amount of cash from circulation.
Market analysts said the heavy subscription highlights the continued preference for short-term fixed-income assets amid elevated interest rates and lingering economic uncertainty.
Yields fall despite strong demand
Despite the huge demand, stop rates on the instruments closed below the 20% mark, reflecting the ongoing repricing in Nigeria's fixed-income market.
The 69-day bill cleared at 19.25%, while the 90-day and 153-day instruments were allotted at 19.05% and 18.39%, respectively.
The lower stop rates suggest that investors remain willing to accept slightly reduced yields in exchange for the safety and liquidity offered by CBN-backed instruments.
Financial market observers noted that demand was particularly strong for the longer-dated bills, indicating growing confidence among investors seeking to lock in attractive returns before rates potentially ease further, according to a report by Punch.
Liquidity conditions remain tight
The latest intervention also highlights the CBN's continued efforts to tighten liquidity in the banking system.
Money market indicators remained elevated following the auction. The overnight lending rate edged up by two basis points to 22.20%, while the Open Repo Rate held steady at 22.00%.
The sustained high funding rates suggest that liquidity conditions remain relatively tight, even after previous rounds of liquidity management by the apex bank.
By selling OMO bills, the CBN withdraws excess naira liquidity from banks and other investors, helping to manage money supply, influence short-term interest rates and support broader monetary policy objectives.
What it means for the economy
The strong investor response demonstrates continued confidence in high-yield government securities and reflects the attractiveness of fixed-income investments in the current interest-rate environment.
At the same time, the aggressive liquidity mop-up signals that the CBN remains focused on controlling excess cash in the system, supporting price stability and reducing speculative pressures that could weigh on the naira.
Source: Getty Images
With investors submitting three times the amount initially offered, the latest OMO auction has reinforced the central bank's position as a major liquidity manager while highlighting the growing competition for attractive fixed-income opportunities in Nigeria's financial market.
Meanwhile, the naira faced fresh pressure in the official and parallel markets, depreciating to N1,331 per dollar on Thursday, September 17, 2026, as against the previous rate of N1,329.
The latest push by the CBN is to boost the naira's strength across all trading platforms as Nigeria's reserves hit a 17-year high.
Dealers quote new rates for the dollar
Legit.ng earlier reported that the Nigerian naira weakened against the US dollar at the official foreign exchange market on Wednesday as renewed demand for the greenback interrupted its recent rally.
Data from the Central Bank of Nigeria (CBN) showed that the naira depreciated to N1,329.21 per dollar at the Nigerian Foreign Exchange Market (NFEM), compared with N1,320.25 recorded on Tuesday.
Source: Legit.ng
