At the start of the trading week, system liquidity was robust, with a credit balance of ₦906.85 billion. This supported relatively stable short-term interest rates. Liquidity was also bolstered by the maturity of Nigerian Treasury bills during the period.
However, by week’s end, the liquidity balance had contracted sharply by ₦603.81 billion, settling at ₦303.04 billion. The decline was attributed to foreign exchange settlements by the Central Bank of Nigeria (CBN), debit transactions from NTB auction payments, and remittances to Single Treasury Accounts, according to a note from AIICO Capital Limited.
Despite the contraction, liquidity remained in surplus throughout the week. As a result, interbank lending rates experienced only modest increases.
The Overnight Policy Rate (OPR) rose by 8 basis points week-on-week, closing at 26.58%, while the overnight lending rate (O/N) increased by 10 basis points to end the week at 26.96%.
The market demonstrated resilience, with interest rates hovering near the 27% threshold despite the impact of liquidity-draining activities. Analysts note that upcoming inflows from bond coupon payments amounting to ₦183.07 billion are expected to boost system liquidity and sustain current funding rate levels.
Liquidity pressures intensified midweek following debits related to the CBN’s Cash Reserve Ratio (CRR) and settlements for foreign exchange interventions, driving system balances down to approximately ₦340 billion.
Average liquidity within the financial system declined, though it remained in positive territory. The net long position settled at ₦425.84 billion, a significant drop from the prior week’s level of ₦1.33 trillion, according to Cordros Capital Limited.
