By Seun Ibiyemi
The Central Bank of Nigeria (CBN) has announced plans to deploy fresh Open Market Operations (OMO) this week to absorb an estimated ₦784 billion expected to flow into the banking system.
A schedule of the inflows shows that OMO maturities worth ₦459.60 billion are due today, while Nigerian Treasury Bill (NTB) maturities totalling ₦324.41 billion will be received on Thursday.
CBN data indicated that banking system liquidity opened at ₦275.9 billion on 1 September 2025, reflecting a 10.4 per cent increase from ₦249.8 billion recorded a week earlier.
OMO remains one of the apex bank’s primary monetary policy tools, allowing it to control liquidity and curb inflationary pressures. By issuing OMO bills, the CBN borrows from banks and investors through short-term securities, thereby absorbing excess cash from the system.
In its latest market report, Coronation Merchant Bank said Wednesday’s NTB auction of ₦480 billion would further assist in tightening liquidity.
Bond traders also expect yields in the Federal Government of Nigeria (FGN) bond market to ease, buoyed by sustained investor appetite for recently issued instruments.
Last week, liquidity in the banking system rebounded to a surplus of ₦1.40 trillion after standing at a deficit of ₦609.43 billion the previous week. The reversal was driven by Federation Account Allocation Committee (FAAC) disbursements and OMO maturities of ₦758 billion, which offset the CBN’s liquidity absorption of ₦1.19 trillion.
This liquidity boost led to a drop in interbank rates, with the Open Repo Rate (OPR) and Overnight (OVN) rate falling to 26.50 per cent and 26.95 per cent, respectively.
Market analysts have observed that the central bank has intensified its tightening measures under Governor Olayemi Cardoso. By 22 August 2025, the CBN had withdrawn ₦13.35 trillion from the system year-to-date, a sharp rise from ₦7.45 trillion in the same period of 2024.
The measures appear to be yielding results, with Nigeria’s headline inflation easing for the fourth consecutive month, from 22.22 per cent in June to 21.88 per cent in July 2025.
Analysts also point to elevated OMO yields as a key factor in attracting foreign portfolio inflows, which have strengthened naira stability.
Speaking on the strategy, United Capital Plc’s Chief Economist, Mr. Akinwunmi, said the apex bank had deployed OMO as a central instrument for liquidity management and price stability.
“OMO has been strategically used to attract Foreign Portfolio Investments, a move that has stabilised the naira, reduced excess money supply, and supported disinflation. Collectively, these outcomes have bolstered investor confidence and reinforced Nigeria’s appeal as an investment destination,” he stated.
The CBN’s OMO programme marks one of its most aggressive liquidity-tightening campaigns in years. According to FBNQuest, total OMO sales surged to ₦13.5 trillion in 2024, compared to ₦723 billion in 2023. On 11 November 2024 alone, the central bank sold over ₦1.4 trillion in 365-day OMO bills, nearly double the entire total for the preceding year.
Analysts attribute this scale-up to the need to attract foreign portfolio inflows and improve FX liquidity. Yields on OMO bills, which peaked at 24.4 per cent in September 2024, created attractive conditions for carry trades, particularly when compared to U.S. treasury yields.
“We expect upward pressure on yields in the near term as liquidity conditions tighten further due to sustained OMO issuances,” Coronation Merchant Bank added in its commentary.