The Central Bank of Nigeria on Tuesday declined all subscriptions amounting to about N4.9 trillion at its Open Market Operations auction, even though it had offered N600 billion across two maturities.
The decision was taken amid persistent excess liquidity in the banking system, as the apex bank continues to adjust monetary conditions to rein in inflation and keep money market rates stable.
The OMO auction was designed to partly refinance maturing bills estimated at around N2.14 trillion. Given the prevailing liquidity conditions, market watchers had anticipated robust participation.
At the time of the auction, the money market was said to be in a strong net long position of about N4 trillion, leaving banks and other eligible investors with substantial funds to deploy. As expected, total bids climbed sharply to N4.9 trillion, far above the amount offered.
Despite the overwhelming demand, the central bank made no allotments, effectively rejecting all submitted bids.
Analysts described the move as a clear monetary policy signal by the CBN. They said the decision reflects the bank’s resolve to avoid injecting additional liquidity into an already saturated system, a move that could undermine efforts to curb inflation and enforce monetary discipline.
They also noted that the apex bank appeared unwilling to endorse aggressive pricing by investors. The surge in demand was largely driven by expectations of falling yields, but the outright rejection suggests the CBN is determined to prevent a sharp drop in OMO rates that could weaken its tight policy stance.
In addition, the development highlights the bank’s preference for managing liquidity through other channels, such as the Standing Deposit Facility and selective OMO interventions, rather than routinely rolling over maturing obligations.
The action aligns with the CBN’s broader objective of keeping market interest rates consistent with its restrictive monetary posture, while supporting exchange rate stability and moderating inflation.
Meanwhile, activity in the secondary Treasury Bills market was mixed. Yields on one-month, six-month and twelve-month bills declined by 9 basis points, 9 basis points and 4 basis points respectively, while the three-month tenor rose slightly by 2 basis points.
Overall, the average yield on Nigerian Treasury Bills eased marginally by 1 basis point to 18.46 per cent, reflecting sustained investor interest and steady secondary market trading.
Market participants said the rejection of the N4.9 trillion OMO subscriptions underscores the central bank’s commitment to liquidity control, yield discipline and its broader anti-inflation strategy, despite strong investor appetite.
