CBN Withdraws N6.62trn From Banking System Via OMO In September

The Central Bank of Nigeria (CBN) withdrew a net N6.62 trillion from the banking system through Open Market Operations (OMO) in September, as it sold N17.51 trillion in bills and repaid N10.89 trillion in maturing ones.

Analysis of CBN auction and repayment data by showed the sales came from five auctions held on September 1, 8, 16, 24 and 29.

The amount allotted was about 2.7 times the N6.4 trillion initially offered.

Repayments of N10.89 trillion, equal to about 62 per cent of gross sales, went back into the system on five dates during the month. This means much of the activity was the replacement of maturing bills with new ones.

Net absorption was the remaining 38 per cent.

The heaviest withdrawals came at the start and end of the month. The September 1 auction and September 7 maturity produced a net absorption of about N2.82 trillion. The September 29 auction, which raised N4.69 trillion against a N2.43 trillion maturity, removed another N2.25 trillion. The September 22 and 24 transactions resulted in a marginal net injection of about N15 billion.

The September 16 data contains an inconsistency. The reported allotment of N3.292 trillion exceeds total subscriptions of N3.034 trillion. If allotments were capped at subscriptions, gross sales would be about N17.06 trillion and net absorption about N6.17 trillion.

Despite the withdrawals, more than N6.2 trillion was held at the Standing Deposit Facility as of September 29, indicating that substantial liquidity remains in the banking system.