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By Uche Usim
The Central Bank of Nigeria (CBN) withdrew N3.04 trillion from the banking system in a single Open Market Operations (OMO) auction held on June 5, 2026, after investors flooded the exercise with subscriptions far above the amount on offer.
Data reviewed from the auction results showed that the apex bank offered OMO bills worth N600 billion but received subscriptions totaling N3.275 trillion, making the exercise more than five times oversubscribed.
The strong investor demand highlights continued confidence in CBN securities and reflects the bank’s determination to reduce excess cash in the financial system as part of its monetary tightening efforts aimed at controlling inflation and stabilising the economy.
A breakdown of the auction showed that the seven-day OMO bill attracted N179 billion in subscriptions against an offer of N200 billion. The CBN eventually allotted N169 billion at a stop rate of 21.54 per cent.
The 35-day bill recorded stronger demand, drawing N614.43 billion in subscriptions for the N200 billion offered. The apex bank allotted N465 billion at a stop rate of 21.40 per cent.
The biggest attraction, however, was the 133-day OMO bill. Investors subscribed N2.48 trillion for the instrument despite an offer of just N200 billion. The CBN allotted N2.41 trillion at a stop rate of 20.02 per cent, accounting for the bulk of the liquidity withdrawn from the banking system.
Overall, the apex bank allotted N3.04 trillion across the three tenors, effectively removing the same amount from circulation.
Financial analysts say the overwhelming demand for the longer-dated bill suggests investors are willing to lock away funds for longer periods despite slightly lower returns. The 133-day instrument was oversubscribed by more than 12 times, indicating expectations that interest rates may remain elevated for some time.
The OMO auction came alongside other liquidity-tightening measures during the week.
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On June 4, primary market activities involving Nigerian Treasury Bills and Federal Government bonds resulted in a net withdrawal of N992.68 billion from the financial system. Total sales amounted to N1.46 trillion, while repayments stood at N464.60 billion.
As liquidity conditions tightened, the opening balances of banks and discount houses dropped sharply from N108.27 billion on June 2 to N43.92 billion by June 5, representing a decline of nearly 60 per cent.
Funds placed in the CBN’s Standing Deposit Facility (SDF) also showed signs of moderation. SDF balances rose from N5.29 trillion on June 3 to N5.35 trillion on June 4 before falling to N4.74 trillion on June 5.
Although the decline suggests that excess liquidity is beginning to ease, analysts note that the amount of idle funds within the banking system remains significant.
Despite the aggressive liquidity mop-up, fresh inflows are expected to enter the financial system this month.
Projections by the Financial Markets Dealers Association (FMDA) indicate that about N10.9 trillion will flow into the banking sector in June. Of this amount, N7.77 trillion is expected to come from maturing OMO bills.
The N3.04 trillion absorbed by the CBN on June 5 represents nearly 28 per cent of the expected monthly inflows and largely neutralised the N2.73 trillion OMO repayment that matured on the same day.
The latest figures also reveal the scale of the CBN’s liquidity management drive. Between January and April 2026, cumulative OMO sales reached about N30.12 trillion, underscoring the central bank’s commitment to keeping excess liquidity under control.
By accepting N2.41 trillion in subscriptions for the 133-day bill, the CBN appears to be extending the maturity profile of its OMO portfolio, a move that could reduce the frequency of large liquidity injections arising from maturing short-term instruments.
Nevertheless, the N4.74 trillion balance still parked in the SDF as of June 5 suggests that excess liquidity remains a major feature of Nigeria’s banking system, even as the apex bank continues its aggressive efforts to mop up surplus funds.
