The Central Bank of Nigeria (CBN) is expected to conduct fresh Open Market Operations (OMO) auctions this week as banks and foreign investors seek liquidity management instruments following significant bid rejections in the previous round.
Market analysts say the anticipated auctions come as the financial system prepares for about N2.4 trillion in primary market repayments, which could inject additional liquidity into the banking system. The development may prompt the CBN to intensify efforts to absorb excess funds and stabilise liquidity levels in the money market.
Last week, the money market closed with system liquidity estimated at N5.89 trillion, reflecting the impact of recent OMO auctions conducted by the central bank. Despite strong investor interest, the CBN maintained a cautious stance by limiting allotments during the auctions.
Data from the operations showed that the bank offered N1.20 trillion worth of OMO bills but allotted only N490 billion, rejecting nearly 60% of total subscriptions. Total bids received during the auctions stood at N1.22 trillion.
Stop rates for the instruments ranged between 19.35 per cent and 19.40 per cent for the short-term bills. Notably, no allotment was made for the six-day OMO bills, signalling the apex bank’s strategy to tightly control liquidity in the financial system.
Analysts said the strong demand for the instruments highlights investor appetite for high-yielding naira assets amid elevated liquidity levels. Effective yields on the allotted securities were estimated between 20.41 per cent and 20.55 per cent, reflecting continued competition among investors seeking attractive returns in the fixed-income market.
With large repayments expected to enter the system, market watchers believe the CBN will remain active in the OMO market this week as it seeks to balance liquidity conditions, manage inflationary pressures and maintain investor confidence.
