SAT AUG 15 2026-theGBJournal| The Nigerian money market remained well supplied with liquidity this week, even as the Central Bank of Nigeria (CBN) stepped up its sterilisation operations through Open Market Operations (OMO) and Treasury bill-related debits.
The overnight (OVN) rate rose marginally by 15 basis points week-on-week to 22.3%, despite a substantial system liquidity surplus.
Average system liquidity settled at a net long position of N4.64 trillion, up from N3.53 trillion a week earlier, highlighting the depth of liquidity available to banks.
The improvement came despite N2.60 trillion in OMO debits and N1.46 trillion in NTB Primary Market Auction (PMA) debits, which together absorbed N4.06 trillion from the banking system.
These outflows were partly offset by N2.48 trillion in OMO maturities, leaving the banking system with a sizeable liquidity cushion.
With a further N2.22 trillion of OMO maturities due in the coming week, liquidity conditions are likely to remain accommodative unless the CBN undertakes more aggressive sterilisation.
The prospect of another substantial liquidity injection could, however, prompt the central bank to intensify its liquidity-management operations, particularly through additional OMO issuance.
As a result, money-market rates are expected to remain broadly around current levels, although the scale and timing of any CBN mop-up could trigger short-term volatility.
Treasury bills yields rise as investors reposition
The secondary Treasury bills market closed the week on a bearish note, with the average yield across instruments rising by 16bps to 19.3%.
The move was driven primarily by repricing in the NTB segment as investors sold existing positions to raise cash for participation in the CBN’s OMO auction.
Average NTB secondary-market yields increased by 42bps to 18.5%, while the average OMO yield moved in the opposite direction, declining by 16bps to 21.2%.
The divergent moves reflected portfolio repositioning ahead of the primary auctions and the migration of unmet demand for OMO securities into the secondary market.
At Wednesday’s NTB auction, the Debt Management Office (DMO) offered N700 billion across the 91-day, 182-day and 364-day tenors. Investor demand was exceptionally strong, reaching N4.41 trillion, more than six times the amount initially offered.
The DMO ultimately allotted N1.46 trillion, more than double the advertised offer, as it took advantage of strong demand. The 364-day stop rate rose by 24bps to 17.59%, while the 91-day and 182-day rates were unchanged at 16.30% and 16.50%, respectively.
The auction underscored continued investor appetite for short-dated government securities, even as the higher allotment and rising long-tenor stop rate pointed to some upward pressure on funding costs.
Domestic investors gain access to OMO market
The CBN also broadened access to its OMO market during the week, issuing a circular on Wednesday permitting domestic investors to participate in OMO Primary Market Auctions through Deposit Money Banks.
The policy change was reflected immediately at Thursday’s OMO auction, where the CBN offered N600 billion across two tenors.
Demand surged to N4.93 trillion, equivalent to more than eight times the amount on offer, underscoring the strong demand for higher-yielding sterilisation instruments.
The CBN allotted N2.60 trillion, substantially above its advertised offer, at stop rates of 20.39% for the 103-day instrument and 20.01% for the 138-day tenor.
The strong bid levels at the OMO auction suggest that investors remain willing to lock funds into short-term central-bank securities at yields above prevailing NTB levels.
At the same time, the CBN’s decision to accept a significantly larger amount than initially offered indicates an active approach to absorbing excess liquidity from the financial system.
Outlook
The key driver for the money market in the coming week will be the balance between sizeable OMO maturities and the CBN’s sterilisation response. With N2.22 trillion scheduled to mature, system liquidity could rise materially in the absence of offsetting debits.
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