CBN liquidity operations push Nigeria’s interbank rates higher

By Boluwatife Oshadiya | October 12, 2026

Key Points

• Nigeria’s interbank overnight rate rose eight basis points week-on-week to 20.85% as system liquidity surplus fell to approximately ₦3.71 trillion from ₦5.98 trillion
• Treasury bill settlements of ₦969 billion partly offset by ₦706 billion in maturities contributed to liquidity contraction, according to Cowry Asset Management
• Approximately ₦2.4 trillion in scheduled OMO maturities could ease short-term funding pressures in the new week if the CBN does not offset the inflows with fresh liquidity withdrawals

Main Story

Nigeria’s interbank overnight rate rose to 20.85% last week as Central Bank of Nigeria (CBN) liquidity operations reduced the financial system’s surplus, despite substantial Open Market Operations (OMO) maturities and bank placements at the apex bank’s Standing Deposit Facility (SDF).

Cowry Asset Management Limited reported that net system liquidity surplus declined to ₦3.71 trillion from ₦5.98 trillion in the preceding week. The contraction followed the settlement of ₦969 billion in Nigerian Treasury bills, partly offset by ₦706 billion in matured Treasury bills.

The decline occurred despite approximately ₦2.2 trillion in OMO bill repayments and placements of excess funds by banks at the CBN’s SDF window. System liquidity remained positive at approximately ₦3.7 trillion, but the reduced surplus coincided with higher overnight funding costs.

According to Cowry Asset, the overnight interbank rate increased by eight basis points week-on-week to 20.85%, while the funding rate remained unchanged at 20.40%.

The Nigerian Interbank Offered Rate (NIBOR), however, recorded mixed movements across tenors. Its overnight and one-month rates declined by seven and five basis points to 20.24% and 20.73%, respectively.

The three-month NIBOR remained unchanged at 21.43%, while the six-month rate rose by 20 basis points to 21.91%, according to Cowry Asset Management. The divergence indicates that pricing conditions differed across short- and longer-term interbank funding periods.

Investment firms expect liquidity conditions to improve in the new week as OMO bills mature. The supplied reports cite approximately ₦2.4 trillion in scheduled maturities, although the opening section refers to ₦2 trillion, a difference that requires confirmation before publication.

The expected inflows could ease overnight funding pressures if the CBN does not substantially offset them through fresh sterilisation operations. However, subsequent rate movements will depend on the Bank’s liquidity management decisions, government borrowing requirements and investor demand at primary auctions.

What’s Being Said

Cowry Asset Management Limited attributed the liquidity contraction to Treasury bill settlements, noting that matured bills provided only a partial offset. The firm’s reported rate movements point to higher overnight funding costs despite the system retaining a substantial positive liquidity balance.

The supplied investment-market commentary states: “If these repayments are not substantially offset by fresh CBN sterilisation operations, the resulting liquidity injection could ease overnight funding pressures and moderate short-term money-market rates.” The original copy attributes this assessment to investment firms in separate reports but does not identify the individual firms responsible for the quotation.

What’s Next

• OMO maturities: Approximately ₦2.4 trillion in scheduled repayments could inject additional liquidity into the banking system during the new week, subject to confirmation of the reported amount.
• CBN liquidity management: Fresh OMO operations or other sterilisation measures could offset some of the expected inflows and limit the decline in short-term funding rates.
• Primary-market borrowing: Government borrowing requirements and investor demand at Treasury bill auctions will remain important determinants of liquidity conditions and money-market pricing.

Bottom Line

The Bottom Line: Nigeria’s money market remains liquid in aggregate, but the rise in overnight funding costs shows that a large surplus does not automatically translate into cheaper short-term borrowing. The next direction of interbank rates will depend on how much of the expected OMO maturities reaches the banking system and how the CBN manages the resulting liquidity.