The Central Bank of Nigeria (CBN) allocated N853.75 billion in Open Market Operations (OMO) bills to investors on Tuesday, following a primary market auction. The auction had offered N600 billion in OMO bills, but received total subscriptions of N1.3 trillion, indicating strong investor appetite. The bills were issued in two tenors—70-day and 140-day—with stop rates of 19.90% and 19.92% respectively. This move was aimed at mopping up excess liquidity, as N1.02 trillion in existing OMO bills matured around the same time. Many banks have been holding funds in the Standing Deposit Facility due to surplus cash in the system. Despite the large allotment, liquidity is expected to remain high as the month closes. The CBN may conduct further auctions in the coming days to manage liquidity more tightly and stabilise interest rates.
The CBN's oversubscribed OMO auction reveals that investors are still willing to lock in near-20% rates, even as liquidity swamps the system. With N1.3 trillion chasing N600 billion in offered bills, the central bank had room to tighten terms but opted for modest stop rates. This suggests a cautious approach, balancing inflation control with financial stability. For Nigerians, it means borrowing costs will stay high for now, as the CBN resists any signal of easing monetary policy.
