The Central Bank of Nigeria (CBN) withdrew N7.303 trillion from the financial system in May 2026 while injecting N5.734 trillion through maturing instruments, resulting in a net liquidity withdrawal of N1.569 trillion during the month.

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The figures are based on a Nairametrics analysis of CBN daily financial data covering fourteen trading days between May 7 and May 29, 2026.

The data highlights the apex bank’s continued reliance on aggressive liquidity sterilisation measures as it seeks to manage excess naira liquidity and maintain its monetary tightening stance.

The month’s most significant liquidity operation occurred on May 21 when the CBN conducted a N3.692 trillion Open Market Operations (OMO) auction and accepted all subscriptions received across two bill tenors.

The transaction alone accounted for more than half of total OMO sales recorded during the month. Overall, liquidity withdrawals exceeded injections by a significant margin, underscoring the central bank’s determination to absorb excess funds from the banking system.

What the data is saying

CBN liquidity operations in May were dominated by OMO activities, which accounted for the bulk of funds withdrawn from the banking system. Data also showed that primary market operations complemented the liquidity management strategy, although on a smaller scale.

  • On May 15, the CBN conducted OMO sales worth N2.050 trillion, marking the first major liquidity sterilisation exercise of the month and contributing to a decline in the Standing Deposit Facility (SDF) balance from N5.39 trillion to N3.46 trillion by May 18.
  • On May 19, the apex bank repaid N2.247 trillion in maturing OMO bills, representing the largest single-day liquidity injection recorded during the month and temporarily boosting excess liquidity in the interbank market.
  • On May 21, the CBN reversed the impact of the earlier repayment by selling N3.692 trillion in OMO bills, fully accepting subscriptions of N1.525 trillion for the 33-day bill and N2.168 trillion for the 138-day bill.
  • Primary market operations contributed additional withdrawals through sales of N731.75 billion on May 7 and N829.33 billion on May 21, while repayments across multiple settlement dates returned N1.517 trillion to investors.

At the end of the month, 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 into the system, leaving a net drainage of N1.569 trillion.

More insights

The pattern of liquidity management during May unfolded in three distinct phases, revealing how the CBN balanced liquidity injections from maturing instruments with aggressive mop-up operations.

The movements in the Standing Deposit Facility and banking system balances reflected the impact of these interventions throughout the month.

  • The first phase, between May 7 and May 11, featured moderate liquidity tightening as N731.75 billion in primary market sales exceeded repayments, contributing to a decline in the SDF from N6.92 trillion to N4.64 trillion.
  • The second phase, spanning May 15 to May 22, witnessed the sharpest liquidity adjustments as the N2.050 trillion OMO sale was followed by a N2.247 trillion repayment and subsequently countered by the record N3.692 trillion OMO auction conducted on May 21.
  • During the same period, the CBN also conducted N829.33 billion in primary market sales while N634.47 billion matured, resulting in additional net withdrawals that intensified liquidity tightening.
  • The final phase, from May 25 to May 29, saw liquidity conditions improve following a N1.970 trillion OMO repayment, allowing excess reserves to rise and supporting a recovery in system balances.

The combined effect of these operations was evident in the SDF balance, which dropped to a monthly low of N2.70 trillion on May 22 before rebounding to N5.89 trillion by the end of the month as banks redeployed returned funds into overnight deposits with the CBN.

What you should know

The May 2026 liquidity data reflects a broader trend of aggressive monetary tightening that has characterised the CBN’s market operations since the beginning of the year. OMO bills have remained the central bank’s preferred instrument for managing excess liquidity and controlling money supply growth.

  • Cumulative OMO sales between January and April 2026 reached approximately N30.12 trillion, highlighting the scale of liquidity sterilisation undertaken by the apex bank.
  • Nigeria’s N20.12 trillion budget deficit for 2026, with more than 70% expected to be financed through domestic borrowing, continues to inject significant amounts of naira liquidity into the economy.
  • The N5.89 trillion SDF balance recorded on May 29 indicates that substantial excess reserves remained within the banking system despite the month’s net liquidity withdrawal.
  • Market projections indicate that about N2.04 trillion in inflows, largely from maturing OMO bills, could enter the system during the first week of June.

These developments suggest that the CBN may face renewed pressure to conduct further liquidity management operations in June, with its response to incoming maturities likely to determine whether the current tightening cycle continues or system liquidity expands further.