Banking System Surplus Liquidity Rises 70%, Interbank Rates Mixed
The money market has been flooded with a significant surge in liquidity amidst the latest open market operation auction, where the Central Bank auctioned OMO bills worth N600 billion for. . .
The money market has been flooded with a significant surge in liquidity amidst the latest open market operation auction, where the Central Bank auctioned OMO bills worth N600 billion for subscription. Financial system liquidity strengthened significantly, rising 69. 66% to a surplus of ₦5. 05 trillion from N2. 98 trillion, according to AIICO Capital Limited. The uptick was supported by a N23. 96 billion coupon inflow and a 66. 52% increase in CBN Standing Deposit Facility (CBN) placements to N4. 62 trillion. Banks are betting on money market instruments to drive earnings growth as lending at elevated interest rates becomes a risky venture for local lenders seeking to protect customers’ deposits and earn returns. In the absence of significant pressure in the money market, short-term benchmark interest rates continue to swing, with the open repo rate having been floored at 22%. Market analysts said Nigerian Interbank Offered Rates traded on a mixed note, with the overnight rate remaining unchanged at 22. 21% despite healthier system liquidity. The 3-month rate also held flat, whereas the 1-month and 6-month tenors dropped by 6 bps and 8 bps, respectively. Short-term funding costs showed slight divergence, Cowry Asset Management Limited said in a note. The overnight lending rate edged up by a basis point to 22. 15% while the Open Repo rate remained flat at 22. 00%. Last week, liquidity conditions closed at about N3 trillion following debits for Central Bank OMO and Treasury bills auction allotments to market participants. The Open Repo Rate (OPR) closed at 22. 00% p. a. , while the Overnight Rate (OVN) settled at 22. 12% p. a. , reflecting relatively stable funding conditions despite the decline in system liquidity. In a note, Herwood Securities Limited anticipates liquidity to rise with N2. 45 trillion in OMO bill maturities and another N283. 78 billion in inflows from matured Treasury bill paper this week. Meanwhile, the CBN OMO bills auction settlement totalling N2. 52 trillion allotted to investors on Monday will sterilise a huge part of free liquidity in the financial market. Money Market Rates Mixed as OMO Debit Drains Liquidity by 38%Julius AlagbeJulius Alagbe is a senior financial journalist and Editor at MarketForces Africa with nearly two decades of experience in finance, accounting, and economics reporting. He is one of Nigeria's most prolific financial market reporters, covering capital markets, monetary policy, corporate earnings, banking, telecoms, and macroeconomic developments across Africa. Julius has built a strong footprint reporting on Nigeria's leading corporates and financial services sector, including coverage of the Nigerian Exchange Group, Central Bank of Nigeria monetary operations, MTN Nigeria, GTCO, and major investment banking transactions. He regularly monitors the CBN’s open market operations, interbank FX markets, and equity market movements, providing readers with real-time intelligence on Nigeria’s financial landscape. His reporting draws on direct access to institutional research from firms including Moody’s Ratings, CardinalStone Securities, Fitch, and other leading African investment houses. Julius brings analytical depth and editorial rigour to every story, making complex financial data accessible to professionals, investors, and policymakers across Africa. Julius Alagbe is based in Lagos, Nigeria.