The Central Bank of Nigeria (CBN) injected a net N5.21 trillion into the banking system between August 4 and August 11, with a single N2.48 trillion Open Market Operations (OMO) repayment on August 11 accounting for the largest one-day liquidity release during the period.
The figures are contained in financial data published by the apex bank on Tuesday, August 11.
The liquidity injection comes just ahead of the CBN’s N700 billion Nigerian Treasury Bills (NTB) auction scheduled for Wednesday, August 12, on behalf of the Debt Management Office (DMO).
The N5.21 trillion repayment reflects the scale of OMO and Treasury Bills maturities returning funds to the banking system as the CBN resumes primary market issuance.
The N2.48 trillion repayment on August 11 accounted for 47.60% of the total liquidity released during the period. The remaining N2.73 trillion, representing 52.40%, came from Primary Market Repayments executed on August 4 and August 6.
The CBN repaid N2.45 trillion on August 4 and another N283.78 billion on August 6.
Wednesday’s NTB auction follows the cancellation of a similar N700 billion offering on August 5, after the CBN withdrew a combined N4.69 trillion through back-to-back OMO auctions on August 3 and 4.
Analysts at Cordros Securities had projected that about N1.58 trillion in OMO Bills would mature during the week. However, the N2.48 trillion repayment settled on August 11 exceeded the projected maturity figure.
The size of the liquidity released ahead of the auction could strengthen demand for Treasury Bills, particularly as recent auctions have attracted significant oversubscription.
At the July 29 auction, the CBN allotted approximately N1.25 trillion against an initial N700 billion offer, with strong demand concentrated on the 364-day Treasury Bill.
At the July 8 auction, the apex bank allotted N1.06 trillion, while the stop rate on the one-year bill rose to 17.70% from 17.34%. Demand for the 182-day instrument remained relatively weak, with subscriptions of N29.94 billion against the N100 billion on offer.
The latest liquidity injection comes after the CBN intensified its monetary operations in July, using OMO sales to mop up N7.18 trillion from the banking system.
The apex bank has since alternated between aggressive liquidity mop-ups and sizeable repayments, with Tuesday’s N2.48 trillion release representing one of the largest recent injections into the financial system.
With substantial liquidity now back in the banking system ahead of an auction weighted toward the 364-day tenor, investors will be watching subscription levels, allotment sizes and stop rates closely.
The auction outcome could provide an indication of whether the elevated liquidity will push Treasury Bill yields lower or be absorbed by continued institutional demand for one-year government securities.
