By Boluwatife Oshadiya | August 31, 2026
Key Points
- CBN absorbs N2.79 trillion through Wednesday’s OMO auction as system liquidity falls to N4.61 trillion
- Another N2.69 trillion OMO allotment and N763 billion Treasury bill settlement push liquidity to N3.61 trillion
- Longer-dated NIBOR rates rise as the market begins pricing a tighter funding environment
Main Story
The Central Bank of Nigeria (CBN) tightened money market liquidity last week through N5.48 trillion in OMO allotments and N763 billion in Treasury bill settlements, according to Cowry Asset Limited.
System liquidity opened at N5.46 trillion after N139.15 billion in inflows, with substantial OMO maturities initially supporting the market. However, the CBN resumed active liquidity sterilisation as it sought to absorb surplus funds from the banking system.
The apex bank allotted N2.79 trillion through an OMO auction on Wednesday, against N2.32 trillion in OMO maturities. The intervention left system liquidity at N4.61 trillion, compared with a potential N7.40 trillion without the sterilisation, Cowry Asset said.
The liquidity drain continued on Thursday when the CBN allotted another N2.69 trillion in OMO bills, while N763 billion in Nigerian Treasury bills was settled. System liquidity subsequently closed the week at N3.61 trillion.
Despite the sizeable withdrawals, short-term funding conditions remained relatively stable. The overnight rate declined seven basis points to 22.21%, while the funding rate remained unchanged at 22.00%.
The Nigerian Interbank Offered Rate (NIBOR) also eased marginally by one basis point to 22.229%. However, rates further along the curve moved higher, with one-month, three-month and six-month NIBOR rates increasing by 11, 28 and 34 basis points respectively.
What’s Being Said
“This points to a market that remains reasonably liquid in the immediate term, but is beginning to price in a tighter funding environment over the medium term,” Cowry Asset Limited said in its market note.
What’s Next
- Further OMO auctions and Treasury bill settlements will determine how quickly surplus liquidity is absorbed
- Money-market participants will continue monitoring the NIBOR curve for evidence of sustained funding pressure
Bottom Line:
The CBN’s renewed sterilisation is absorbing a substantial portion of the banking system’s liquidity without triggering an immediate spike in overnight funding costs. However, rising rates across the longer NIBOR tenors suggest the market is beginning to anticipate tighter funding conditions beyond the immediate trading horizon.
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