The Central Bank of Nigeria (CBN) has intensified its efforts to stabilise the foreign exchange market and control inflation by mopping up an estimated N2.8 trillion from the banking system within one week. The liquidity withdrawal was carried out through Nigerian Treasury Bills (NTB) and Open Market Operations (OMO) auctions as part of the apex bank’s tighter monetary stance.
According to market data, about N894 billion was withdrawn through Treasury Bills, while a much larger N1.9 trillion was mopped up via OMO auctions. This means banks collectively lost nearly N2.79 trillion in liquidity during the week, as they used the funds to purchase government and central bank instruments. The move reflects the CBN’s continued reliance on market-based tools to manage excess cash in circulation.
The apex bank’s decision is aimed at reducing excess liquidity in the financial system, which often fuels inflation and increases demand for foreign exchange. By tightening cash availability, the CBN hopes to discourage speculative dollar demand and ease pressure on the naira in both official and parallel markets.
Despite the heavy liquidity mop-up, system liquidity remained relatively strong at N4.06 trillion, supported by inflows from maturing Treasury Bills worth about N758 billion. However, short-term money market rates showed mild adjustments, with the overnight rate easing to 22.20 per cent and funding rate steady at 22.00 per cent, indicating that interbank activity remained functional.
Meanwhile, the naira showed mixed performance across FX markets, weakening to N1,358.44/$1 at the official window while staying flat at N1,390/$1 in the parallel market. Analysts say ongoing global tensions and cautious foreign portfolio inflows are contributing to sustained pressure on the currency, even as high domestic yields continue to attract investors. Financial research firms expect the CBN to maintain a tight monetary stance while deploying targeted FX interventions to stabilise the market in the near term.