By Abubakar Yunusa
The Central Bank of Nigeria on Thursday intensified its monetary tightening campaign, mopping up N3.692tn from the financial system through an aggressive Open Market Operations auction.
Findings from the apex bank’s auction results analysed by Nairametrics showed that investors flooded the auction with subscriptions far above the amount offered by the CBN.
The bank had offered N600bn across two instruments — a 33-day bill and a 138-day bill — but total subscriptions surged to N3.692tn, representing more than six times the amount on offer.
The development marks a significant shift from the May 12 auction when the apex bank adopted a cautious approach by accepting only N116bn out of N872bn subscriptions received.
At the latest auction conducted on May 21, the 33-day bill attracted N1.525tn in subscriptions against the N300bn offered, representing a 5.1 oversubscription.
The CBN accepted the entire bids at a marginal rate of 21.57 per cent.
Similarly, the 138-day bill recorded stronger demand as investors staked N2.168tn for the N300bn offer, translating to a 7.2 oversubscription.
The apex bank also accepted all bids at a marginal rate of 19.97 per cent.
Analysts said the decision of the CBN to absorb the entire subscriptions signalled a deliberate attempt to drain excess liquidity from the banking system amid concerns over inflationary pressure and rising money supply.
The auction also reflected strong appetite for high-yield government instruments as investors sought safer investment outlets.
Further checks on the CBN financial data showed that the Standing Deposit Facility dropped sharply from N6.103tn on May 20 to N5.797tn on May 21.
The figure fell further to N2.703tn on May 22, representing a decline of over 55 per cent within two days.
Opening balances within the banking system also declined from N102.47bn on May 20 to N78.96bn on May 22, indicating tighter liquidity conditions across the financial sector.
