Total Foreign Portfolio Investors (FPI) holdings in Open Market Operations (OMO) bills is currently estimated between $18.0 billion and $20.0 billion (excluding private placement structures), as the re-entry of domestic capital broadens the investor base and establishes a unified fixed-income yield curve.
Despite expected yield compression and the gradual convergence of OMO yields toward Nigerian Treasury Bill (NTB) rates, the carry trade remains attractive for international investors.
Banking channel data by CardinalStone indicates ongoing FPI dollar sales for Naira assets to lock in prevailing yields ahead of further compression.
The alignment of OMO and NTB yield profiles is not expected to trigger immediate FPI capital flight. Even when evaluated on standard NTB rates, real returns remain competitive when paired with modest expectations for exchange rate stability.
The Central Bank of Nigeria (CBN) recently overhauled its Open Market Operations (OMO) and discount window framework. The revision reverses the October 2019 ban, once again permitting individuals, domestic corporate entities, and non-bank financial institutions (NBFIs) to participate directly in both primary and secondary OMO markets via Deposit Money Banks (DMBs).
When implemented in late 2019, the restriction was intended to ring-fence high-yielding OMO bills exclusively for Foreign Portfolio Investors (FPIs) to attract foreign exchange inflows, prop up external reserves, and sterilize excess domestic banking liquidity.
Over time, however, OMO transformed primarily into an FX management anchor.
2027 Election Outlook & $55 Billion Reserve Target
As the domestic political cycle shifts toward the 2027 general elections, political risk considerations may cause FPI inflows to moderate below their current monthly run-rate of ~$1.6 billion.
However, robust non-FPI inflows—supported by expanding crude oil production, deepwater fiscal incentives, tax revenues, and non-oil exports—are expected to keep foreign exchange reserves well-funded, providing the CBN with the capacity to push gross reserves past $55.0 billion by year-end 2026, CardinalStone analysts forecast.
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