The Central Bank of Nigeria (CBN) withdrew a total of N7.303 trillion from the financial system in May 2026, while injecting N5.734 trillion through maturing instruments, resulting in a net liquidity drainage of N1.569 trillion for the month. This analysis, based on CBN daily financial data covering fourteen trading days from May 7 to May 29, 2026, underscores the apex bank’s continued reliance on aggressive liquidity sterilisation measures to manage excess naira liquidity and maintain its monetary tightening stance.
The most significant liquidity operation occurred on May 21, when the CBN conducted a N3.692 trillion Open Market Operations (OMO) auction, accepting all subscriptions received across two bill tenors. This single transaction accounted for more than half of total OMO sales recorded during the month. Overall, liquidity withdrawals exceeded injections by a substantial margin, reflecting the central bank’s determination to absorb excess funds from the banking system.
OMO activities dominated CBN liquidity operations in May, accounting for the bulk of funds withdrawn. Primary market operations complemented this strategy, though on a smaller scale. By month-end, OMO operations produced a net withdrawal of N1.525 trillion, while primary market activities resulted in a net withdrawal of approximately N44 billion. Combined, total liquidity withdrawn stood at N7.303 trillion, compared with N5.734 trillion injected, leaving a net drainage of N1.569 trillion.
The liquidity management pattern in May unfolded in three distinct phases, revealing how the CBN balanced injections from maturing instruments with aggressive mop-up operations. Movements in the Standing Deposit Facility (SDF) and banking system balances reflected the impact of these interventions throughout the month. The SDF balance dropped to a monthly low of N2.70 trillion on May 22 before rebounding to N5.89 trillion by month-end, as banks redeployed returned funds into overnight deposits with the CBN.
This May 2026 liquidity data reflects a broader trend of aggressive monetary tightening that has characterised the CBN’s market operations since the start of the year. OMO bills remain the central bank’s preferred instrument for managing liquidity, a strategy that continues to draw attention amid broader economic discussions, including those surrounding Tinubu, Shettima to spend N11 billion, Bauchi Federal Poly, Reactions Trail Nnamdi, Is Bola Tinubu, and Atiku Says 2025. The CBN’s actions aim to stabilise the financial system, though their impact on overall economic conditions remains a subject of ongoing analysis.
