The Central Bank of Nigeria (CBN) has withdrawn approximately N2.5 trillion from the financial system through its latest Open Market Operations (OMO) auction, intensifying its liquidity-tightening drive as the naira depreciated to N1,331 per dollar on Thursday, September 17, 2026.
Massive Oversubscription in OMO Auction
The auction, held on Wednesday, September 16, 2026, drew overwhelming investor interest, with total subscriptions reaching about N3 trillion—three times the N1 trillion the apex bank initially offered. This surge in demand underscores the continued preference for high-yield government-backed securities amid elevated interest rates and economic uncertainty.
The CBN offered bills across three maturities: 69 days, 90 days, and 153 days. In response to strong appetite, the regulator increased its allotment significantly above the original offer size, eventually selling about N2.5 trillion worth of bills and effectively removing substantial cash from circulation.
Stop Rates Fall Below 20% Despite Strong Demand
Despite the heavy subscription, stop rates on the instruments closed below the 20% mark, reflecting 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.
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. 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.
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.
Impact on the Economy and the Naira
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.
Meanwhile, the naira faced fresh pressure in the official and parallel markets, depreciating to N1,331 per dollar on Thursday, September 17, 2026, against the previous rate of N1,329. The latest push by the CBN aims to boost the naira's strength across all trading platforms as Nigeria's reserves hit a 17-year high.
In a related development, Legit.ng earlier reported that the 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 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.
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.
