By: ThinkBusiness Africa
The Nigerian Naira maintained its upward trajectory this week, bolstered by an extraordinary N2.728 trillion surge in investor demand during the Central Bank of Nigeria’s (CBN) first Open Market Operations (OMO) auction of 2026. The aggressive mop-up of excess liquidity has provided the local currency with a much-needed tailwind, cooling demand for the US Dollar across both official and informal markets.
Following the auction settlement, the Naira firmed to N1,419 /$1 at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, marking its fourth consecutive session of gains.
The local currency ended 2025 at N1435/$
This appreciation is directly linked to fresh foreign exchange inflows from Foreign Portfolio Investors (FPIs) who moved to take advantage of the high-yield environment offered by the apex bank.
The CBN entered the market on Tuesday, January 6, with an initial offer of N600 billion, a split equally at N300 billion each between a 161-day and a 210-day tenor.
However, the result was a massive oversubscription that saw the apex bank allot nearly the entire bid volume to sterilize a banking system that had opened the week with a N4.12 trillion liquidity surplus.
The 161-day OMO bill received subscriptions totaling N277 billion, of which the CBN allotted N259 billion at a stop rate of 19.34%, with a maturity date set for June 16, 2026.
The demand for the 210-day OMO bill was even more pronounced, attracting a staggering N2.451 trillion in subscriptions—over eight times the original offer. The CBN opted to allot the entire N2.451 trillion subscription for this tenor at a stop rate of 19.40%, maturing on August 4, 2026.
In total, while the CBN initially sought to raise N600 billion, the overwhelming demand from Deposit Money Banks and Foreign Portfolio Investors led to a total subscription of N2.728 trillion.
The data reveals a significant “long-term” bias, with the 210-day bill attracting 8.1 times its original offer. By allotting N2.451 trillion for this single tenor, the CBN has successfully locked away a massive portion of the money supply for the next seven months.
Foreign investors accounted for a significant portion of the bids. To fund these purchases, dollars were converted into Naira, directly increasing liquidity at the NAFEM window and pushing external reserves to a robust $45.62 billion.
By removing N2.7 trillion from the system, the CBN has made the Naira “scarce” in the interbank market. This scarcity discourages speculative dollar hoarding, as banks and corporations prioritize Naira for settlement and operational needs.
With the 210-day stop rate at 19.40%, the CBN is offering rates that compete effectively with emerging market peers, signaling a commitment to maintaining a “hawkish” stance until inflation targets are met.
The success of this auction has reset market expectations for the quarter. Earlier this week, analysts at CardinalStone updated their 2026 forecast, suggesting the Naira could stabilize within the N1,350 – N1,450/$1 range if the CBN maintains this level of frequency in its OMO interventions.
“We expect the Naira to appreciate to a range of N1,350.00/$ – N1,450.00/$ in 2026, supported by improving fundamentals,” CardinalStone stated.
The massive oversubscription suggests that investors have confidence in the central bank’s current policy direction and expect interest rates to remain elevated in the medium term.
