The Central Bank of Nigeria (CBN) withdrew N7.18 trillion from the financial system through Open Market Operations (OMO) auctions in July, sustaining its tight monetary policy despite conducting fewer market interventions during the month.
The July liquidity mop-up represented a 48.6 per cent decline from the N13.96 trillion sterilised in June, largely because the apex bank held only three OMO auctions in July, compared with seven conducted in the previous month.
However, analysts noted that the lower monthly figure reflected a shift in strategy rather than a relaxation of monetary policy, as the CBN relied on fewer but significantly larger auctions to absorb excess liquidity from the banking system.
An analysis of OMO auction results showed that the apex bank conducted auctions on July 13, July 14 and July 28, raising a cumulative N7.18 trillion during the period.
In comparison, the seven auctions held in June—on June 2, 8, 11, 22, 23, 29 and 30—resulted in the sterilisation of a record N13.96 trillion.
The June operations formed part of an aggressive liquidity management campaign, with the CBN offering N600 billion at each auction, amounting to N4.2 trillion in total.
Investor appetite remained exceptionally strong during the month, as total subscriptions reached approximately N15.27 trillion, while the CBN allotted N13.96 trillion, representing about 91.4 per cent of all bids received.
The June 2 auction recorded the highest demand of the month, attracting subscriptions of N2.15 trillion, out of which N2.01 trillion was allotted.
Although the June 8 auction posted the weakest demand, investors still subscribed N1.73 trillion, with N1.51 trillion allotted.
The month concluded with back-to-back auctions on June 29 and June 30, with the latter attracting subscriptions more than three times the amount offered and resulting in an allotment of N1.52 trillion.
Overall, June recorded an average oversubscription ratio of 3.16 times the amount offered.
Despite the reduced number of auctions in July, investor participation remained robust.
The CBN maintained its offer size of N600 billion per auction, bringing the total amount offered during the month to N1.8 trillion. However, average subscriptions rose to nearly four times the amount offered, underscoring sustained investor demand for the instruments.
The July 28 auction emerged as the largest OMO sale of the year, with the CBN allotting N3.5 trillion in a single operation.
Demand continued to be driven largely by the 127-day tenor, which dominated subscriptions throughout June and remained the preferred investment instrument in July. At the July 13 auction alone, the tenor attracted bids worth N1.854 trillion.
Stop rates remained elevated during the review period, ranging between 20.39 per cent and 22.65 per cent, with shorter-dated instruments clearing at higher yields than longer-tenor bills. The trend reflected continued investor preference for short-term, high-yield securities amid the prevailing high interest rate environment.
The pattern of the CBN’s interventions highlights two distinct liquidity management approaches. While June was characterised by frequent market operations spread across the month, July saw the apex bank adopt a more concentrated strategy, using fewer but significantly larger auctions to achieve its liquidity sterilisation objectives while maintaining its broader monetary tightening stance.
