Nigeria’s interbank market closed last week on a mixed note as system liquidity stayed buoyant despite the Central Bank of Nigeria’s (CBN) intensified efforts to withdraw excess cash through market operations.
Financial data indicated that the banking sector’s excess funds, which peaked at about ₦5 trillion during the week, remained robust even after the apex bank conducted two major liquidity-absorbing operations—Open Market Operations (OMO) and treasury bill sales.
By the close of trading, system liquidity stood at ₦3.91 trillion, marking a 58.3% increase from ₦2.47 trillion recorded the previous week. This followed an earlier liquidity surge midweek, when OMO repayments worth ₦1.5 trillion pushed total system liquidity to ₦4.6 trillion.
Despite these tightening measures, banks continued to place surplus funds at the CBN’s Standing Deposit Facility (SDF) window, earning below the borrowing rate. Market analysts at Cowry Asset Management Limited noted that interbank lending activity remained muted, with the Nigerian Interbank Borrowing Rate (NIBOR) closing flat at 24.88%.
The liquidity inflow largely came from maturing OMO and Nigerian Treasury Bills (NTBs) alongside sustained placements by deposit money banks at the SDF window. Liquidity levels improved from ₦3.1 trillion at the start of the week to ₦5 trillion at its peak before closing at ₦3.9 trillion after the CBN’s ₦1.2 trillion OMO auction.
Overall funding conditions remained relaxed, with the average cost of borrowing dropping by four basis points week-on-week. At the end of Friday’s session, the Open Repo Rate (OPR) held firm at 24.50%, while the Overnight Rate (O/N) declined slightly by seven basis points to 24.79%.
