The Central Bank of Nigeria allotted about 4.27 trillion naira across its two latest liquidity operations, comfortably above what it offered, in a sign that demand for naira-denominated government securities remains strong even after the central bank’s pivot to easing. At the Treasury bill auction, the bank offered 900 billion naira across 91-, 182- and 364-day paper, drew subscriptions of about 1.8 trillion naira and allotted 968 billion, according to auction results cited by Cowry Asset Limited. Stop rates held at 15.50% for the 91-day and 15.80% for the 182-day, while the 364-day cleared four basis points lower at 15.85%. A parallel open-market operation offered 2 trillion naira of 147- and 182-day paper, drew 3.5 trillion in subscriptions and allotted 3.3 trillion, clearing at 17.22% and 16.92% respectively.
The results extend a steady downward drift in bill yields since the CBN’s September 22 decision to cut the monetary policy rate by 350 basis points to 23%, a surprise move aimed, in Governor Olayemi Cardoso’s framing, at repairing monetary-policy transmission as market rates had diverged from the benchmark. The 364-day stop rate has now fallen at five consecutive auctions.
The context is a central bank trying to have it both ways. The rate cut was designed, in the CBN’s own words, to stimulate productive activity while keeping inflation on a path toward single digits, and the bank has pointed to improving reserves and a steadier naira as cover. Zitra Investments chief executive Babatunde Obadero told ThisDay the cut should bring lending rates down and lift borrowing. But with headline inflation still far above target and fuel prices at record highs, the heavy absorption through OMO shows the CBN is simultaneously mopping up liquidity, a posture that keeps effective financial conditions tighter than the 23% policy rate suggests.