Nigeria’s interbank lending rates maintained stability this week following a decline in system liquidity caused by banks reducing their deposits at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF).
Excess liquidity in the money market had previously exceeded ₦4 trillion amid a pause in open market operations (OMO). However, the recent bonds auction settlement failed to absorb the surplus cash.
Reflecting the easing liquidity, interbank rates remained steady across all maturities on Thursday, with the overnight rate closing at 24.88%, signaling balanced funding conditions and minimal liquidity pressure.
Liquidity Conditions and Rate Movements
Market data indicated that overall liquidity eased to ₦2.3 trillion — a decline of ₦2.2 trillion from the previous level — mainly due to reduced SDF placements, which fell to ₦1.9 trillion from ₦4.1 trillion.
Analysts at Cowry Asset Limited confirmed that medium-term money market rates were also unchanged, while AIICO Capital Limited projected that “funding costs will likely remain stable in the absence of significant market activity.”
At Thursday’s close, the Open Repo Rate (OPR) stood at 24.50%, and the overnight lending rate settled at 24.84%.
Fixed-Income Market Activity
In the Treasury Bills secondary market, yields moved in mixed directions. Short- to medium-term maturities (1-month, 3-month, and 6-month) compressed by 7, 1, and 1 basis points, respectively, while the 12-month tenor expanded by 8 basis points.
Overall, the average yield on Nigerian Treasury Bills declined by 127 basis points to 16.13%, indicating strong investor demand and a preference for high-quality assets in the fixed-income space.
The trend suggests growing investor confidence amid a flight to safety and resilient market fundamentals, reinforcing expectations of continued stability in short-term funding rates.
 Standing Deposit Facility (SDF).){kind=link}