In a firm display of its tightening monetary stance, the Central Bank of Nigeria (CBN) raised N1.008 trillion at its Open Market Operations (OMO) auction on Friday more than double its initial offer amid surging investor demand and persistent inflationary pressures.
The auction, which was originally set to raise N500 billion across two short-term debt instruments, attracted total bids nearing N1.4 trillion, translating to a 102% oversubscription. The outcome underscores investor appetite for high-yield government securities in the face of sustained inflation and a growing money supply.
The most sought-after instrument was the 319-day OMO bill, set to mature on March 10, 2026. It drew a staggering N1.062 trillion in bids over four times its N250 billion offer. The CBN eventually allotted N688.3 billion at a stop rate of 22.73%, with bids ranging from 20.39% to 23.75%.
The second instrument, a 298-day bill maturing on February 17, 2026, also saw robust demand. It attracted bids worth N329.54 billion for the same N250 billion offer, with the CBN allotting N319.54 billion at a slightly lower stop rate of 22.37%.
Analysts say the strong uptake reflects investor expectations that the CBN will maintain elevated interest rates to combat inflation, prompting a rush to lock in current yields.
The aggressive liquidity mop-up comes amid concerns over Nigeria’s expanding money supply, despite measures such as the world’s highest cash reserve ratio (CRR) of 50%. According to the CBN’s latest data, broad money supply (M3) soared to N114.22 trillion in March 2025, a 24% increase year-on-year from N92.19 trillion in March 2024.
On a monthly basis, M3 rose 3.2% from February’s N110.71 trillion, driven largely by a 38.9% surge in net foreign assets (NFA), which climbed to N45.17 trillion—signalling strong capital inflows and improved external liquidity.
The CBN’s latest OMO operation signals a clear intent to tighten financial conditions and rein in liquidity, even as markets grapple with macroeconomic imbalances and rising inflation.
