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The Central Bank of Nigeria (CBN) intensified its liquidity management efforts in June, withdrawing about N3.30 trillion from the banking system through Open Market Operations (OMO) and Federal Government bond settlement debits as it maintained a tight monetary policy stance aimed at containing inflation and stabilising the foreign exchange market.
According to Cowry Research’s June 2026 monthly market report, the apex bank mopped up approximately N2.10 trillion through aggressive OMO auctions, while an additional N1.20 trillion exited the banking system through bond settlement debits.
Despite the sizable liquidity withdrawals, the banking system remained awash with cash, closing the month with a liquidity surplus of about N4.10 trillion. The report attributed the resilience in system liquidity to continued fiscal injections and the maturity of existing market instruments, noting that over N1 trillion in OMO maturities is expected to flow back into the banking system this month, providing additional liquidity support.
The report noted that the CBN’s restrictive monetary policy continued to shape money market conditions, with short-term interest rates remaining elevated throughout the month.
Specifically, the Overnight (OVN) lending rate rose to 22.23 per cent, while the Nigerian Overnight Financing Rate (NOFR), which tracks actual interbank lending transactions, climbed as high as 24.00 per cent during the month amid heightened market volatility. The benchmark also recorded an average daily movement of about two percentage points.
Similarly, yields across the Nigerian Interbank Offered Rate (NIBOR) curve advanced, particularly at the longer end, reflecting market expectations that the CBN would maintain its tight monetary policy stance for an extended period. At the close of June, the one-month and six-month NIBOR stood at 22.84 per cent and 24.11 per cent, respectively.
Investor expectations of prolonged policy tightening and persistent inflationary pressures also drove upward repricing across the Nigerian Treasury Bills True Yield (NITTY) curve. However, activity in the secondary Treasury bills market remained relatively subdued as investors adopted a cautious approach following the higher yields recorded at primary market auctions.
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Consequently, the average secondary market Treasury bill yield edged slightly lower to 17.47 per cent, reflecting mixed portfolio rebalancing and selective demand across different maturities.
Meanwhile, the primary treasury bills market continued to attract robust investor interest as high yields enhanced the appeal of government securities.
At the CBN’s treasury bills auction during the month, investor demand exceeded expectations, resulting in an oversubscription of about 2.16 times.
The strong demand enabled the apex bank to raise N1.46 trillion against its initial offer of N1.00 trillion, reinforcing its liquidity sterilisation strategy.
The report added that stop rates continued to adjust upwards, with the yield on the 364-day Treasury bill rising to approximately 17.34 per cent during the month.
Looking ahead, analysts at Cowry Research said they expect money market conditions to remain relatively stable but characterised by elevated interest rates as the CBN continues to prioritise inflation control and exchange rate stability over liquidity expansion.
“While expected OMO maturities and sustained banking system liquidity could provide temporary relief to short-term funding conditions, the report said the apex bank is likely to continue actively sterilising excess liquidity whenever necessary to maintain its tight monetary policy stance”, they said.
