…OMO sales in first four months match 2025 total
Traditionally, pre-election years in Nigeria are characterised by a deluge of campaign spending that could drown the economy in inflationary pressure. To preempt this surge, the Central Bank of Nigeria (CBN) has ramped up its Open Market Operations (OMO) to an unprecedented scale, acting as a vacuum for the surplus cash circulating within the financial system.
The magnitude of this intervention is staggering. Within the first four months of 2026, OMO sales have hit N30.12 trillion, nearly closing in on the total volume recorded for the entirety of 2025. This aggressive tightening is a strategic manoeuvre to anchor inflation and insulate the naira against the volatility typically triggered by election spending.
Despite declining external reserves, the naira has maintained a degree of resilience across both official and parallel markets.
A monthly report by the Financial Markets Dealers Association (FMDA) stated that the naira appreciated across both the official and parallel market segments in April, supported by improved foreign exchange liquidity conditions. Total turnover at the Nigerian Foreign Exchange Market (NFEM) rose to $8.51 billion during the month.
On Thursday, the naira recorded a marginal gain of N1.49 at the official market, with the dollar quoted at N1,355.85 compared to N1,357.34 on Wednesday, according to data from the CBN.
Total FX turnover at the NFEM also rose sharply by 82 percent to $772.57 million on Wednesday from $424.46 million recorded the previous day, indicating stronger market activity and improved liquidity.
According to the FMDA report, exchange rate movements were influenced more by global financial conditions and cross-border capital flows than by oil price dynamics. Increased crude oil production in March, alongside stronger portfolio inflows, also provided additional support for the local currency.
Data from FMDA showed that OMO sales rose significantly from N728 billion in 2023 to N35.48 trillion in 2025, before reaching N30.12 trillion within the first four months of 2026 alone.
The figures reflect a major shift in the CBN’s liquidity management strategy after years of relatively subdued OMO activity.
In 2022, OMO sales stood at N860 billion for the full year before declining slightly to N728 billion in 2023. The trend, however, reversed sharply in 2024 when the apex bank ramped up issuances to N13.31 trillion, representing an increase of about 1,728 percent year-on-year.
The tightening cycle intensified further in 2025 as OMO sales climbed to N35.48 trillion, up 166.6 percent from 2024 levels.
Already, OMO sales recorded between January and April 2026 account for about 84.9 percent of the entire amount sold in 2025, highlighting the scale of liquidity sterilisation currently underway within the financial system.
Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., said the sharp increase in OMO activity was largely driven by efforts to attract foreign investors as the ongoing Middle East crisis fuels capital flight towards safer assets and developed markets.
A market summary report by CardinalStone on Thursday noted that the CBN floated an OMO auction offering N600 billion across 33-day, 75-day and 96-day instruments.
Total subscriptions stood at about N1.6 trillion, reflecting sustained investor appetite for high-yield government securities. Eventually, the CBN allotted roughly N1.6 trillion at stop rates of 21.57 percent, 20.63 percent and 20.45 percent, respectively.
Adebowale Funmi, head of research at Parthian Securities, said the sharp increase in OMO issuances from N728 billion levels in early 2023 to about N30.12 trillion in 2026 reflects a deliberate shift in monetary policy towards aggressive liquidity management and macroeconomic stabilisation.
According to her, a major catalyst has been the surge in system liquidity driven by higher Federation Account Allocation Committee (FAAC) disbursements following subsidy removal and FX liberalisation in 2023, alongside the rollover of maturing instruments.
“This liquidity build-up has necessitated more aggressive sterilisation by the Central Bank to rein in inflationary pressures,” she said, noting that CBN data showed OMO sales surged by more than 400 percent year-on-year in the first quarter of 2026.
She added that OMO instruments have also been strategically deployed to attract and retain foreign portfolio inflows.
“With yields typically ranging between 19 percent and 22 percent, OMO bills have remained attractive to both domestic and offshore investors, thereby supporting FX liquidity,” she said.
Funmi noted that the implications for the financial industry remain mixed.
“On one hand, heightened OMO activity has enhanced market depth, improved liquidity conditions and provided attractive low-risk investment options for banks and asset managers.
“On the other hand, elevated yields on these instruments create a crowding-out effect, as financial institutions are incentivised to channel funds into risk-free government securities rather than extend credit to the private sector, potentially constraining real sector growth,” she said.
Analysts at FMDA also said the sharp increase in OMO sales from N728 billion in 2023 to about N30 trillion as of April 2026 reflects a combination of monetary tightening, liquidity management efforts and attempts to attract foreign portfolio inflows into Nigeria’s financial markets.
According to the analysts, the FX reforms introduced in 2023, alongside aggressive monetary tightening through higher Monetary Policy Rate (MPR) levels in response to rising inflation, improved investor confidence and increased demand for high-yield naira assets, particularly OMO bills and other money market instruments largely targeted at foreign portfolio investors.
The analysts said this partly explains the strong surge in capital importation recorded in 2025, particularly through money market instruments, which accounted for nearly 60 percent of total inflows, according to FMDA Research analysis.
They added that while higher OMO activity has improved foreign investor participation, strengthened FX liquidity and provided banks with attractive risk-free investment opportunities, elevated yields have also increased funding costs across the economy and could weaken credit creation to the private sector.
According to them, higher funding costs may raise production costs for businesses and increase the risk of loan defaults across critical sectors of the economy.