The Central Bank of Nigeria is intensifying efforts to contain excess liquidity in the banking system, offering N1.5tn in Open Market Operations bills on Tuesday as fresh inflows from maturing securities threaten to add further pressure to cash balances.
The latest offer comes as banking system liquidity rose to N8.505tn at the close of trading on Friday, 6 November, from N7.373tn a week earlier, representing a 15.36 per cent increase.
The apex bank is offering N500bn each in 154-day, 252-day and 329-day OMO instruments, marking its third auction between 3 November and 10 November.
The fresh offer follows N5.667tn allotted by the CBN at its 3 November and 6 November auctions, reflecting its aggressive approach to withdrawing excess funds from the financial system.
However, expected inflows of N2.448tn into the banking system this week could complicate the liquidity management exercise.
According to the Financial Market Dealers Association’s weekly market report published on Monday, 9 November, OMO maturities account for N2.298tn, or 93.9 per cent of projected inflows.
This represents a 13.99 per cent increase from the N2.016tn in OMO maturities recorded in the preceding week.
Treasury bills maturities are expected to contribute another N148.565bn, while corporate bond coupon payments are projected at N1.707bn.
The weekly inflow projection is, however, 6.21 per cent lower than the N2.610tn estimated for the previous week.
Data from the CBN also showed that banks’ deposits at its Standing Deposit Facility fell to N5.915tn on 9 November from N8.311tn on 6 November, following OMO settlements.
The decline suggests that the apex bank’s recent operations have absorbed some of the funds previously parked by financial institutions.
The latest auction follows two substantial OMO operations through which the CBN allotted N5.667tn in six days.
At the 3 November auction, the apex bank offered N1.5tn but received subscriptions of N3.52tn and allotted N2.95tn.
The stop rates were 17.77 per cent, 17.71 per cent and 17.67 per cent across the 119-day, 126-day and 133-day instruments, respectively
At the 6 November auction, investors submitted bids worth N5.74tn against another N1.5tn offer, prompting the CBN to allot N2.72tn.
Stop rates stood at 17.25 per cent for the 179-day instrument, 16.54 per cent for the 270-day bill and 15.74 per cent for the 361-day security.
Combined, the N5.667tn allotted in the two November auctions was equivalent to about 91.7 per cent of the N6.182tn allotted throughout October.
While the CBN is intensifying its OMO operations, the Debt Management Office has continued to allot less than investors demand at T-bills auctions.
At its 4 November auction, the DMO allotted N509.401bn against an offer of N800bn, despite receiving subscriptions of N2.045tn.
The allotment represented approximately 24.9 per cent of total subscriptions.
The DMO is scheduled to offer another N800bn in T-bills today, comprising N100bn each in 91-day and 182-day instruments and N600bn in 364-day bills.
The auction will settle on 12 November, when N148.565bn in T-bills maturities are expected to enter the banking system.