By Boluwatife Oshadiya | March 27, 2026
Key Points
- System liquidity rises to ₦8.87 trillion, up 8.38% week-on-week
- Overnight rate dips to 22.30% as funding pressures ease
- Treasury bill yields decline across maturities amid improved demand
Main Story
Excess liquidity in Nigeria’s banking system climbed to ₦8.87 trillion, reflecting improved funding conditions as deposit flows into the Central Bank of Nigeria Standing Deposit Facility (SDF) surged, according to data from Meristem Securities Limited.
The liquidity expansion represents an 8.38% increase from ₦8.18 trillion recorded earlier, driven primarily by a 7.32% rise in SDF balances and a ₦225.13 billion net inflow from maturing instruments exceeding new issuances at the primary market.
Money market rates reflected the improved liquidity position. The overnight lending rate declined marginally by 2 basis points to 22.30%, while the Open Repo rate held steady at 22.00%. Meanwhile, the Nigerian Interbank Offered Rate (NIBOR) softened across most tenors, indicating reduced short-term borrowing pressures among banks.
The easing in funding costs comes despite the CBN conducting a ₦600 billion Open Market Operation (OMO) auction, suggesting that liquidity inflows were sufficient to absorb the monetary tightening effort.
In the fixed income market, yields on Nigerian Treasury Bills declined across the curve. One-month, three-month, six-month, and 12-month instruments dropped by 6bps, 4bps, 12bps, and 8bps respectively, following a ₦400 billion NTB auction that strengthened investor participation.
Average Treasury bill yield edged down to 17.82%, reflecting cautious but improving demand in the fixed-income market.
What’s Being Said
“The liquidity uptick reflects strong system inflows and continued reliance on the SDF window, even as the CBN maintains active liquidity management through OMO auctions,” Meristem analysts said in a market note.
“Rates are likely to remain range-bound in the near term unless there is a significant liquidity mop-up or fiscal shock,” a Lagos-based fixed income trader told BizWatch Nigeria.
What’s Next
- Further OMO auctions by the CBN are expected to test liquidity resilience
- Market participants will monitor system liquidity ahead of the next Monetary Policy Committee (MPC) decision
- Treasury bill auction results in coming weeks will provide direction on yield trajectory
The Bottom Line:
Nigeria’s banking system is currently flush with liquidity, but the CBN’s continued intervention suggests a delicate balance between easing funding pressures and controlling inflation. Sustained excess liquidity could weaken monetary tightening effectiveness if not actively sterilised.
