CBN offers one-year OMO bills at 23.7% in aggressive bid to attract foreign capital

Obianuju Uzukwu

In a bold move to boost foreign portfolio inflows and stabilize the naira, the Central Bank of Nigeria (CBN) has raised the yield on its one-year Open Market Operations (OMO) bills to a striking 23.7%, about 782 basis points higher than comparable-tenored notes issued on behalf of the government last month

The aggressive rate hike signals the apex bank’s intensified efforts to woo foreign investors amid persistent macroeconomic headwinds, including inflationary pressures, currency volatility, and capital flight.

By offering one of the highest returns in emerging markets, the CBN is leveraging monetary tightening as a strategic tool to deepen liquidity, anchor exchange rate expectations, and restore investor confidence in Nigeria’s fragile economy.

The central bank of Africa’s most populous nation uses these instruments to attract dollar inflows and manage excess liquidity in the banking system, as foreign investors must convert their funds into local currency to invest in the papers.

The central bank sold 2.12 trillion naira ($1.38 billion) of the bills in the Tuesday auction, with Rand Merchant Bank (RMB) estimating that 30% to 40% of the demand came from foreign investors.

Portfolio inflows from foreign investors have helped sustain naira stability this year, after the currency lost about 43% of its value against the dollar in 2024.

Inflows into money market instruments like OMOs jumped 151% in the first quarter of the year to $5.2 billion, accounting for 92% of all inflows, according to data published by Nigeria’s statistics agency Tuesday.

Foreign investors can buy both OMOs and treasury bills, but they prefer OMOs because of the higher yields.