Nigeria’s financial system is expected to receive a liquidity boost of about N8.61 trillion in February 2026, largely driven by maturities from Open Market Operations (OMO), Treasury bills (T-bills), and coupon payments on government bonds.
The projection was contained in FMDA’s Monthly Market Report for February 2026, which noted that the inflows will play a critical role in shaping money market conditions, fixed income yields, and foreign exchange dynamics in the coming weeks.
The body for treasury and financial market practitioners in Nigeria stressed that Nigeria’s operating environment remains “liquidity-managed rather than liquidity-driven,” with CBN actions continuing to play a central role in shaping near-term funding conditions and foreign exchange dynamics.
What the data is saying
FMDA identified OMO maturities as the dominant liquidity driver for the month, underscoring the Central Bank of Nigeria’s (CBN) continued reliance on the instrument for liquidity management.
A breakdown of the expected inflows shows:
- OMO maturities: N4.61 trillion, accounting for about 53% of total inflows
- Treasury bills maturities: N1.43 trillion
- FGN bond coupon payments: N448.96 billion
- Corporate bond coupons: N6.85 billion
- FAAC allocations: N1.97 trillion to be shared among the federal, state, and local governments
According to FMDA, proceeds from these maturities are expected to flow back into the system, potentially easing funding pressures after a period of aggressive liquidity tightening.
January liquidity squeeze sets the tone
The anticipated February inflows follow a sharp liquidity contraction in January, when the CBN intensified its tightening stance.
FMDA estimates that over N6.76 trillion was withdrawn from the system through OMO operations and Treasury bill auctions during the month.
This aggressive mopping-up kept interbank rates elevated, with Overnight (OVN) and Open Buy Back (OPR) rates trending higher, reflecting tight funding conditions across the banking system.
Impact on yields and the naira
Fixed income yields remained elevated in January compared with December 2025, as tight liquidity and firm rate expectations dominated market sentiment.
FGN bond yields moved higher across most tenors, with the sharpest repricing seen in the 7–10 year segment, driven by supply pressures and cautious investor positioning rather than a shift in monetary policy expectations.
Treasury bill yields also repriced upward, particularly at the 6–12 month tenors, following sustained auction sizes and strong stop rates.
Overall, the yield curve steepened modestly, suggesting investors continue to demand higher compensation for longer-dated instruments amid heavy issuance and liquidity reallocation.
Despite mixed movements in global bond markets, FMDA noted that Nigeria’s long-dated yields were largely influenced by domestic liquidity and supply dynamics, overshadowing external rate signals.
FX outlook: Reinvestment and sterilisation key
The institutional treasury dealers comprising commercial and merchant banks as well as discount houses cautioned that while the N8.61 trillion inflow could ease funding pressures, its ultimate impact on liquidity levels and the naira will depend on several factors.
These include:
- Reinvestment behaviour of institutional investors
- CBN’s sterilisation actions through fresh OMO and T-bill auctions
- Fiscal-side liquidity injections, particularly FAAC disbursements
In January, a combination of rising external reserves, firmer oil prices, OMO auctions, and a softer U.S. dollar helped provide some buffer for the naira which strengthened at about N1,380 per Dollar.
Oil prices also strengthened during the month as geopolitical risk premiums increased amid concerns over potential U.S. action against Iran.
What you should know
Nairametrics had reported that in January 2026, the CBN aggressively sterilised over N15 trillion from the banking system, marking one of the most intensive liquidity mop-up operations in recent times.
The liquidity drain was driven mainly by large-scale:
- Open Market Operations (OMO) sales: N8.5 trillion
- Substantial placements by banks at the Standing Deposit Facility: N2.9 trillion
- Primary market Treasury bill issuances: N3.7 trillion.
These outflows were only partially offset by inflows from OMO maturities and Treasury repayments, leaving the banking system significantly cash-starved by month-end.
The tightening stance saw interbank funding stress intensify, with money market rates, including the Open Buy Back and Overnight rates, rising sharply as banks competed for scarce liquidity.
While February’s large inflows—dominated by OMO maturities—may offer temporary relief, analysts say close attention will remain on how aggressively the CBN moves to re-absorb liquidity and what that means for interest rates and FX stability.
