By Boluwatife Oshadiya | September 30, 2026
Key Points
- Banking-system liquidity rises 37.01% to ₦8.84 trillion ahead of OMO settlement
- CBN floats ₦2.5 trillion in OMO bills across three tenors and raises about ₦5 trillion
- Overnight lending rate rises to 20.86% despite liquidity remaining above the ₦8 trillion level
Main Story
Banking-system liquidity rose 37.01% to ₦8.84 trillion ahead of the settlement of the Central Bank of Nigeria’s latest Open Market Operations bills, according to AIICO Capital Limited.
The increase lifted financial-system liquidity from ₦6.45 trillion and pushed the surplus above twice its start-of-year level of ₦3.82 trillion, reflecting OMO repayments and other inflows into the money market.
The CBN offered ₦2.5 trillion in OMO bills across three tenors as part of efforts to manage excess liquidity, with the auction eventually raising about ₦5 trillion from investors.
Despite the strong liquidity position, short-term funding rates moved higher. Broadstreet analysts reported that the overnight lending rate increased by 0.28 percentage points to 20.86%, while the overnight policy rate remained at 20.50%.
The Nigerian Overnight Financing Rate remained at the 20% floor of the interest-rate corridor following the recent reduction in the monetary policy rate to 23%. The average Treasury bill rate also remained unchanged at 17.84%, according to AIICO Capital Limited.
The liquidity increase came ahead of the settlement of the OMO transaction, which is expected to remove a substantial amount of cash from the banking system.
What’s Being Said
AIICO Capital Limited reported that the banking system entered the OMO settlement period with liquidity at ₦8.84 trillion, significantly above the level recorded at the start of the year.
The firm expects overnight rates to remain close to the 20% floor while system liquidity stays above ₦8 trillion, with the expected ₦4.69 trillion OMO settlement set to drain liquidity from the market.
What’s Next
The immediate focus is the settlement of the ₦4.69 trillion OMO sale, which is expected to reduce the liquidity surplus in the banking system.
Market participants will also monitor overnight funding rates and the Nigerian Overnight Financing Rate to determine how quickly money-market conditions respond to the liquidity withdrawal.
Bottom Line
The banking system entered the OMO settlement with a sizeable liquidity surplus, but rising overnight funding costs show that abundant cash has not translated directly into cheaper short-term funding. The OMO settlement will provide the next test of how quickly liquidity conditions tighten.
