The Central Bank of Nigeria (CBN) recorded an estimated net liquidity injection of ₦3.2 trillion into the financial system in October 2026, as repayments on maturing government securities exceeded funds raised through fresh auctions, marking a reversal of the substantial liquidity withdrawals recorded in September.
Figures from the apex bank’s Open Market Operations (OMO) and Nigerian Treasury Bills (NTBs) auctions showed that approximately ₦10.69 trillion was returned to investors during the month, compared with ₦7.49 trillion raised through new securities.
The difference resulted in a net repayment surplus of approximately ₦3.20 trillion, indicating that fresh securities issuance replaced only about 70 per cent of the funds returned to investors between October 2 and 29.
The development contrasts sharply with September, when the CBN withdrew approximately ₦6.62 trillion from the financial system through OMO operations, as it intensified efforts to manage excess liquidity and maintain monetary stability.
During October, the apex bank conducted three OMO auctions, while the Debt Management Office (DMO), on behalf of the Federal Government, conducted three Treasury Bills auctions. Combined subscriptions across the six auctions reached ₦13.23 trillion, but only approximately 57 per cent of the bids were accepted.
A breakdown of the figures showed that OMO auctions generated ₦6.18 trillion against approximately ₦6.71 trillion in maturing obligations, leaving a repayment surplus of about ₦527 billion.
Similarly, Treasury Bills auctions raised ₦1.31 trillion against repayments of approximately ₦3.985 trillion, resulting in a difference of about ₦2.68 trillion.
The relatively lower amounts raised through fresh auctions contributed to the overall liquidity surplus recorded during the period.
The trend became particularly pronounced towards the end of October, when the monetary authorities adopted a more selective approach to accepting investors’ bids.
At the October 28 Treasury Bills auction, the DMO allotted only ₦71.16 billion from subscriptions of approximately ₦1.91 trillion, leaving the overwhelming majority of bids unfilled.
The final two auctions of the month also raised only ₦316.10 billion against subscriptions of approximately ₦4.19 trillion, further widening the gap between repayments and fresh borrowing.
The increased liquidity coincided with a significant rise in funds deposited by commercial banks with the CBN through its Standing Deposit Facility (SDF), a monetary policy instrument that allows financial institutions to deposit excess funds with the apex bank in exchange for interest.
Data showed that banks’ net deposits through the facility exceeded ₦6 trillion following a major OMO repayment on October 13.
SDF balances subsequently rose to ₦8.41 trillion on October 28 before declining to ₦7.63 trillion on October 29 and ₦7.19 trillion on October 30.
The elevated balances suggest that substantial funds remained within the banking system but were deposited with the apex bank rather than immediately deployed into other financial activities.
Meanwhile, interest rates on some short-term government securities declined during October, reflecting changing liquidity conditions and investors’ willingness to accept lower returns on newly issued instruments.
The stop rate on the 138-day OMO instrument fell to 17.63 per cent on October 22, compared with 20.01 per cent for a comparable instrument in August.
Similarly, the stop rate on the 364-day Treasury Bill declined to 15.80 per cent on October 28.
The movement followed the September decision of the CBN’s Monetary Policy Committee to reduce the Monetary Policy Rate (MPR) from 26.5 per cent to 23 per cent, representing a 350-basis-point reduction.
The adjustment formed part of the apex bank’s monetary policy response to prevailing economic conditions, including inflation and liquidity management.
Commenting on the development, the Chief Executive Officer of Globalview Capital Limited, Aruna Kebira, described the higher repayments as a positive development, arguing that the CBN was reducing its outstanding obligations to investors.
He suggested that the repayment pattern might also be partly connected to efforts to support liquidity following the substantial funds committed to the Dangote Refinery’s public offer.
However, he cautioned that the figures alone were insufficient to establish the regulator’s actual intentions.
On his part, the Head of Financial Institutions Ratings at Agusto & Co., Olubunmi Ayokunle, identified OMO operations as a more significant indicator for assessing the CBN’s monetary policy direction.
He explained that a substantial proportion of investors holding OMO securities were foreign investors, meaning that repayments on such instruments did not necessarily translate into an equivalent increase in funds available within the domestic economy.
Ayokunle also distinguished between Treasury Bills, which are issued on behalf of the Federal Government to finance its borrowing requirements, and OMO instruments, which the CBN deploys as part of its monetary policy operations to manage liquidity.
Financial analysts have consequently cautioned against interpreting the ₦3.20 trillion repayment surplus as an equivalent amount of newly created money entering the economy.
The figure represents the difference between specified maturing securities and fresh auction allotments. Actual liquidity conditions are also influenced by government spending, foreign exchange transactions, repayments to foreign investors and other financial activities.
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