By Boluwatife Oshadiya | August 27, 2026
Key Points
- Treasury bill and OMO settlements reduced the financial system’s liquidity surplus to ₦3.57 trillion
- Average funding cost increased eight basis points week-on-week to 22.13%
- Overnight lending rate rose 15 basis points to 22.25% despite substantial liquidity buffers
Main Story
Nigeria’s money market tightened after Treasury bill and Open Market Operation (OMO) settlements drained liquidity from the financial system, pushing short-term funding costs higher.
According to Cowry Asset Limited, the intermarket credit balance fell from an opening surplus of ₦4.35 trillion to ₦3.57 trillion following ₦1.45 trillion in Treasury bill settlement debits and ₦2.60 trillion in OMO settlements.
The Central Bank of Nigeria (CBN) also sterilised about ₦2.5 trillion through an OMO auction, while approximately ₦2.48 trillion from maturing OMO bills flowed back into the financial system. The maturities partly offset the liquidity withdrawn through the securities settlements.
Cowry Asset said the market remained in surplus despite the tightening, while some banks borrowed ₦15.80 billion through the CBN’s Standing Lending Facility to meet short-term funding requirements.
Average funding costs increased eight basis points week-on-week to 22.13%, while the overnight lending rate rose 15 basis points to 22.25% at Friday’s close. The Open Repo Rate remained unchanged at 22.00%.
System liquidity opened at ₦4.07 trillion and peaked at ₦6.81 trillion, supported by OMO maturities and bank placements through the CBN’s Standing Deposit Facility.
“The liquidity outflows were partly offset by approximately ₦2.48 trillion in OMO maturities, leaving the system with a still-sizeable ₦3.57 trillion surplus,” Cowry Asset Limited.
The latest market movement shows that sizeable liquidity buffers are not necessarily translating into lower overnight funding costs when large government securities settlements and central bank liquidity operations occur.
The Issues
The latest tightening reflects the sensitivity of Nigeria’s money market to the timing and scale of Treasury bill and OMO settlements.
The effect was moderated by OMO maturities and other liquidity inflows, leaving the system with a substantial surplus rather than an outright funding shortage. Recent market analysis also showed that liquidity had risen to ₦4.47 trillion in the week beginning August 24, supported by a ₦3.01 trillion Federation Account Allocation Committee inflow and other repayments.
What’s Being Said
Cowry Asset Limited attributed the latest movement to the interaction between securities-related liquidity outflows and OMO maturities, with the latter cushioning the impact of the debits.
Alpha10 Group’s weekly market review similarly reported that money-market liquidity remained in surplus but tightened toward the end of the week after Treasury bill and OMO settlements, with the OPR holding at 22.00% and funding costs remaining responsive to CBN liquidity-management operations.
What’s Next
The CBN and Debt Management Office (DMO) are scheduled to continue Treasury bill issuance as part of domestic liquidity and government funding operations.
A ₦700 billion Treasury bill auction was scheduled for August 27, comprising ₦100 billion each of 91-day and 182-day bills and ₦500 billion of 364-day bills.
Further OMO maturities and securities settlements will determine whether the system’s liquidity surplus remains comfortable or whether short-term funding rates face additional upward pressure.
Bottom Line:
The money market remains liquid, but the latest rate movement shows that the size of the liquidity surplus alone does not determine funding costs. The CBN’s sterilisation operations and the timing of Treasury bill settlements will remain key drivers of short-term market conditions.
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