CBN drains N1.57 trillion from banking system in May as tightening continues
By Aboki Forex —
The Central Bank of Nigeria withdrew N7.303 trillion from the financial system in May 2026 while injecting N5.734 trillion through maturing instruments. This resulted in a net liquidity withdrawal of N1.569 trillion during the month.
The figures come from a Nairametrics analysis of CBN daily financial data covering 14 trading days between May 7 and May 29, 2026. The data shows the apex bank’s continued reliance on aggressive liquidity sterilisation measures as it manages excess naira liquidity and maintains its monetary tightening stance.
OMO operations drive the month
The month’s biggest operation occurred on May 21 when the CBN conducted a N3.692 trillion Open Market Operations auction. It accepted all subscriptions across two bill tenors. That single transaction accounted for more than half of total OMO sales for the month.
Overall, withdrawals exceeded injections by a wide margin. This underscores the central bank’s determination to absorb excess funds from the banking system.
What the data says
CBN liquidity operations in May were dominated by OMO activities. These accounted for the bulk of funds withdrawn. Primary market operations also supported the strategy, though on a smaller scale.
On May 15, the CBN conducted OMO sales worth N2.050 trillion. That was the first major liquidity sterilisation exercise of the month. It helped push the Standing Deposit Facility balance down from N5.39 trillion to N3.46 trillion by May 18.
On May 19, the bank repaid N2.247 trillion in maturing OMO bills. That was the largest single-day liquidity injection recorded during the month. It temporarily boosted excess liquidity in the interbank market.
On May 21, the CBN reversed that impact by selling N3.692 trillion in OMO bills. It fully accepted subscriptions of N1.525 trillion for the 33-day bill and N2.168 trillion for the 138-day bill.
Primary market operations added further withdrawals through sales of N731.75 billion on May 7 and N829.33 billion on May 21. Repayments across multiple settlement dates returned N1.517 trillion to investors.
By month end, OMO operations produced a net withdrawal of N1.525 trillion. Primary market activities resulted in a net withdrawal of about N44 billion. Combined, total liquidity withdrawn stood at N7.303 trillion against N5.734 trillion injected. The net drainage was N1.569 trillion.
Three phases of liquidity management
The pattern of liquidity management during May unfolded in three distinct phases. Movements in the Standing Deposit Facility and banking system balances reflected the impact of these interventions.
First phase: May 7 to May 11. Moderate tightening as N731.75 billion in primary market sales exceeded repayments. The SDF declined from N6.92 trillion to N4.64 trillion.
Second phase: May 15 to May 22. The sharpest adjustments. The N2.050 trillion OMO sale was followed by a N2.247 trillion repayment. Then came the record N3.692 trillion OMO auction on May 21. During this period, the CBN also conducted N829.33 billion in primary market sales while N634.47 billion matured. This resulted in additional net withdrawals that intensified tightening.
Final phase: May 25 to May 29. Liquidity conditions improved after a N1.970 trillion OMO repayment. Excess reserves rose, supporting a recovery in system balances.
The combined effect was clear in the SDF balance. It 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.
What you should know
The May 2026 liquidity data reflects a broader trend of aggressive monetary tightening that has characterised CBN operations since the start of the year. OMO bills remain the central bank’s preferred tool for managing excess liquidity and controlling money supply growth.
Cumulative OMO sales between January and April 2026 reached about N30.12 trillion. This highlights the scale of liquidity sterilisation the apex bank has undertaken.
Nigeria’s N20.12 trillion budget deficit for 2026, with more than 70% expected to be financed through domestic borrowing, continues to inject significant naira liquidity into the economy.
The N5.89 trillion SDF balance recorded on May 29 shows that substantial excess reserves remained within the banking system despite the month’s net 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. This suggests the CBN may face renewed pressure to conduct further liquidity management operations in June. Its response to incoming maturities will likely determine whether the current tightening cycle continues or system liquidity expands further.