Nigeria’s financial system recorded a notable liquidity expansion on Wednesday as commercial banks increased placements at the Central Bank of Nigeria (CBN)’s liquidity windows ahead of the scheduled debit for Open Market Operation (OMO) bill settlements.
Data obtained from money market analysts across Lagos’ Broad Street showed that aggregate system liquidity climbed 13 percent to ₦3.53 trillion, representing an increase of ₦416 billion compared to the previous trading session. The rise came despite substantial outflows from recent government securities settlements.
Strong Liquidity Backed by CBN Windows
Market participants attributed the improved liquidity conditions primarily to increased activity at the CBN’s Standing Deposit Facility (SDF). Deposits at the SDF window surged to ₦3.97 trillion, offsetting the liquidity impact of the ₦524.27 billion bond settlement from the February 2026 Federal Government primary market auction.
Although liquidity remained elevated, banks refrained from accessing the CBN’s Standing Lending Facility (SLF), indicating that funding conditions were comfortable within the interbank market. The absence of borrowing at the SLF underscores the depth of surplus liquidity currently circulating in the system.
Interbank Rates Ease on Excess Funds
Reflecting the improved funding environment, the Overnight (O/N) rate declined by 10 basis points to settle at 22.15 percent, compared to 22.68 percent in the previous session.
Meanwhile, the Open Repo Rate (OPR) held steady at 22.50 percent, suggesting stable short-term funding conditions despite ongoing monetary operations by the apex bank. Traders noted that excess liquidity continued to suppress volatility in the money market, limiting upward pressure on rates.
CBN Allots ₦1.11 Trillion in OMO Auction
In a significant development, the CBN conducted an OMO auction offering ₦600 billion across three maturities — 6-day, 104-day, and 167-day instruments. However, total allotments exceeded the initial offer, reaching ₦1.11 trillion across the tenors, indicating strong investor appetite for short-term government securities.
The OMO debit, scheduled for Thursday, is expected to withdraw ₦1.11 trillion from the financial system. Analysts warn that unless offset by fresh inflows — such as FAAC disbursements or maturing instruments — liquidity conditions could tighten temporarily.
Treasury Bills Market Closes Bearish
The Nigerian Treasury Bills (NTB) secondary market ended on a weaker note, with the average benchmark yield rising 13 basis points to 17.17 percent. Conversely, the OMO secondary market recorded a sharp yield compression, as average benchmark yields fell by 63 basis points to close at 19.50 percent. Traders linked the yield decline to unmet demand from the primary auction filtering into the secondary segment.
Liquidity Outlook
Despite the upcoming OMO debit, market analysts maintain that overall liquidity conditions are likely to remain supportive in the short term, barring any major outflows. Financial system liquidity trends will continue to influence interbank rates, Treasury yields, and broader fixed-income market dynamics in the days ahead.
’s liquidity windows ahead of the scheduled debit for Open Market Operation (OMO) bill settlements.){kind=link}