By Boluwatife Oshadiya | August 4, 2026
Key Points
- Financial system liquidity surged 69.66% to a ₦5.05 trillion surplus following coupon inflows and higher CBN deposit placements
- Nigerian Interbank Offered Rates traded mixed despite stronger liquidity, with the overnight rate holding at 22.21%
- Analysts expect fresh OMO and Treasury bill maturities to inject more liquidity, although a ₦2.52 trillion OMO settlement will absorb a significant portion
Main Story
Nigeria’s banking system liquidity climbed sharply to a surplus of ₦5.05 trillion, even as interbank funding rates traded on a mixed note following the Central Bank of Nigeria’s (CBN) latest Open Market Operations (OMO) activities.
According to AIICO Capital Limited, system liquidity rose 69.66% from ₦2.98 trillion, supported by a ₦23.96 billion coupon inflow and a 66.52% increase in CBN Standing Deposit Facility (SDF) placements to ₦4.62 trillion. The improvement comes after the CBN auctioned ₦600 billion in OMO bills, reinforcing efforts to manage excess liquidity while maintaining monetary policy discipline.
Despite the stronger liquidity position, activity in the interbank market remained mixed. Market data showed the overnight Nigerian Interbank Offered Rate (NIBOR) was unchanged at 22.21%, while the three-month tenor also held steady. The one-month and six-month tenors declined by six basis points and eight basis points, respectively, reflecting easing pressure across parts of the short-term funding market.
The Open Repo Rate (OPR) closed at 22.00%, while the Overnight Rate (OVN) settled at 22.12%, suggesting relatively stable funding conditions. Meanwhile, the overnight lending rate edged up by one basis point to 22.15%.
Banks have increasingly shifted excess liquidity into money market instruments as elevated interest rates make aggressive lending less attractive, allowing lenders to preserve depositors’ funds while earning relatively risk-free returns.
The Issues
The latest liquidity rebound highlights the delicate balance the CBN continues to maintain between supporting financial system liquidity and containing inflation through liquidity sterilisation. Although liquidity has improved significantly, the central bank’s continued reliance on OMO auctions means excess cash is likely to remain tightly managed, keeping short-term interest rates elevated and limiting broad-based credit expansion across the economy.
What’s Being Said
“Nigerian Interbank Offered Rates traded on a mixed note, with the overnight rate remaining unchanged at 22.21% despite healthier system liquidity,” analysts at Cowry Asset Management Limited said in a market note.
Herwood Securities Limited expects liquidity conditions to strengthen further this week, citing ₦2.45 trillion in maturing OMO bills and ₦283.78 billion from Treasury bill maturities. However, the firm noted that the ₦2.52 trillion OMO auction settlement scheduled for Monday will simultaneously absorb a substantial share of excess liquidity from the banking system.
What’s Next
- The market will monitor the impact of the ₦2.52 trillion OMO auction settlement on banking system liquidity and short-term funding rates.
- Investors are expected to track ₦2.45 trillion in OMO maturities and ₦283.78 billion in Treasury bill repayments for signs of renewed liquidity expansion.
- Attention will remain on the CBN’s liquidity management strategy ahead of future OMO auctions and broader monetary policy decisions.
Bottom Line
The Bottom Line: Nigeria’s money market remains highly liquid, but the CBN continues to actively sterilise excess cash to preserve its tight monetary policy stance. Unless liquidity injections consistently outpace OMO withdrawals, interbank rates are likely to remain around current levels, keeping funding costs elevated for financial institutions while supporting broader inflation-control efforts.
