By Mariam Abeeb
The Central Bank of Nigeria ramped up its Open Market Operations sales to N18.79tn in the first quarter of 2026, a sharp 426 per cent increase from N3.57tn recorded in the corresponding period of 2025.
Latest financial data released by the apex bank also showed that repayments surged significantly, moderating the overall liquidity impact on the financial system.
Despite the aggressive issuance, net OMO sales declined to N1.81tn from N2.01tn a year earlier, signalling a more measured liquidity withdrawal.
The development reflects a shift in the bank’s liquidity management strategy, with stronger intervention in the money market while allowing larger maturities to flow back into the system.
Analysts said the move underscores efforts by monetary authorities to strike a balance between inflation control, exchange rate stability and capital flow pressures amid global uncertainty.
Breakdown of the figures showed that total OMO sales rose from N3.57tn in Q1 2025 to N18.79tn in Q1 2026, while repayments climbed sharply from N1.56tn to N16.98tn within the same period.
Monthly data indicated volatility, with January recording N8.54tn in sales and N5.63tn in repayments, while February saw repayments outpace sales. March, however, closed with a net liquidity withdrawal of about N1.97tn.
Experts said the pattern highlights a dynamic approach to liquidity management, where issuance and repayments are carefully calibrated to stabilise the financial system.
An analyst at Agusto & Co, Olubunmi Ayokunle, said the disparity between the CBN’s issuance and secondary market turnover reflects strong market activity rather than inconsistencies.
He said, “The gap between the N18.79tn OMO issuance and higher secondary market turnover shows a highly active market where liquidity is constantly recycled.
“The CBN reports primary issuance, while trading platforms capture repeated transactions in the secondary market.”
Ayokunle added that the relatively lower net impact indicates a deliberate strategy to manage liquidity without excessively tightening financial conditions.
He also noted that elevated OMO yields point to intense competition for capital and the need to retain foreign investors.
Similarly, the Chief Executive Officer of ECL Asset Management, Charles Fakrogha, said the surge in issuance reflects periods of excess liquidity in the system.
“OMO is used to stabilise liquidity. When there is excess cash, the CBN withdraws it. When liquidity tightens, it allows funds to flow back,” he said.
Fakrogha, however, pointed to a policy dilemma facing the apex bank.
“A $1tn economy requires sufficient liquidity to grow, but excess liquidity fuels inflation and exchange rate instability. The CBN is balancing these competing priorities,” he added.
Further findings showed that OMO yields climbed as high as 21.9 per cent for short tenors, a move experts say is aimed at attracting foreign portfolio investors and sustaining capital inflows.
Market watchers warned that any premature rate cuts could trigger capital flight and exert fresh pressure on the naira.
They maintained that the CBN’s current approach reflects a cautious stance, balancing liquidity withdrawal with the need to maintain overall financial system stability.
