• Fixed-income yields expected to stay elevated to attract foreign exchange.
•• Apex bank balances ₦1.03trn OMO maturities with inflation-control measures
•••Analysts project ₦8.61trn total inflows for February, expect continued market tightness.
The Central Bank of Nigeria (CBN) injected over ₦1.7 trillion into the nation’s banking system during the first week of February 2026. The liquidity surge was driven primarily by cumulative repayments of Open Market Operations (OMO) bills and primary market instruments.
According to a detailed analysis of the apex bank’s financial activities between February 2 and February 6, 2026, the influx comes at a time when the CBN is maintaining an aggressive monetary tightening stance. The policy is designed to curb persistent inflationary pressures and provide a floor for the Naira in the foreign exchange market.
Breakdown of Inflows
Financial data reveals that the liquidity injection was a result of maturing debt instruments rather than fresh money creation. The single largest contributor was the maturity of ₦1.03 trillion in OMO bills on February 3.
This was bolstered by primary market repayments totaling ₦668.87 billion on February 5, following an earlier redemption of ₦24.38 billion at the start of the week. In total, the cumulative repayments for the five-day period stood at ₦1.72 trillion.
Rather than issuing fresh OMO bills to immediately “mop up” this liquidity, the CBN opted to utilize Nigerian Treasury Bill (NTB) auctions across the 91-day, 182-day, and 364-day tenors to absorb excess funds, signaling a surgical approach to liquidity management.
Banks Remain Cautious
Despite the massive headline figures, the “boots on the ground” reality for the banking sector remains one of austerity. Market intelligence suggests that liquidity conditions are still tight, as commercial banks exhibit a subdued appetite for risk.
Instead of deploying the ₦1.7 trillion into interbank lending or private sector credit, banks chose to return surplus funds to the CBN for safekeeping. Standing Deposit Facility (SDF) balances—where banks park excess cash—peaked at ₦2.65 trillion on February 5, before settling at ₦2.49 trillion by the week’s end.
“The preference for risk-free placements at the CBN, even amidst these repayments, underscores the impact of elevated interest rates,” noted a fixed-income analyst. “Banks are grappling with high funding costs and are playing it safe.”
The Balancing Act
The current pattern highlights the CBN’s delicate “tightrope walk.” By allowing large maturities to flow back into the system, the bank provides necessary breathing room for financial institutions, yet it continues to use secondary tools to prevent a surge in money supply that could further fuel inflation.
For the broader economy, this means:
High Yields: Investors can expect elevated yields on government securities to persist.
Credit Squeeze: Small and medium enterprises (SMEs) may find credit growth constrained as banks remain cautious with lending.
FX Stability: The tight liquidity environment is intended to discourage currency speculation and support the Naira.
Outlook for February
The central bank’s recent history suggests no intention of easing its hawkish stance. In January 2026, the CBN executed one of its most aggressive mop-up operations in history, sterilizing over ₦15 trillion through OMO and Treasury Bill issuances.
Market participants estimate that approximately ₦8.61 trillion in total inflows from various maturities could hit the system throughout February. However, the consensus among experts is that the CBN will remain proactive in neutralizing these inflows to prioritize price stability.
As the month progresses, the financial sector remains on high alert, watching for the CBN’s next move in its ongoing battle to stabilize the macro-economy.
