Funding costs in Nigeria’s interbank money market dropped below 25 percent on Wednesday as improved liquidity conditions eased pressure on short-term rates, following policy adjustments by the Central Bank of Nigeria (CBN).
Analysts observed that recent inflows from maturing Open Market Operations (OMO) bills have significantly boosted liquidity, allowing commercial banks to maintain stronger funding positions. As a result, many deposit money banks have continued to park excess cash with the CBN’s Standing Deposit Facility (SDF), earning returns higher than prevailing Treasury bill yields.
Market data from AIICO Capital revealed that financial system liquidity increased by ₦587 billion to reach ₦3.825 trillion midweek. This surge was supported by a massive ₦978.6 billion placement into the SDF, driven by changes in the asymmetric corridor of the Monetary Policy Rate (MPR).
At its most recent meeting, the CBN adjusted the corridor around the MPR from +500/-100 basis points to +250/-250 basis points. The move implies that commercial banks can now borrow funds from the CBN at 29.5 percent, while deposits with the apex bank will earn 24.5 percent.
The robust liquidity position pushed benchmark interbank rates lower. The Open Repo Rate (OPR) declined by 100 basis points to 24.50 percent, while the Overnight Rate (OVN) fell 104 basis points to 24.88 percent. Analysts expect further declines in interbank rates barring new funding pressures, especially with an additional ₦201.4 billion expected from the maturity of Treasury bills on September 25, 2025.
In the secondary Treasury bills market, yields showed mixed performance. The Nigerian Interbank Treasury Bills True Yield (NITTY) reflected increases of 5 basis points, 12 basis points, and 13 basis points on the 1-month, 3-month, and 12-month papers respectively. Conversely, the 6-month tenor yield dropped by 13 basis points. On average, however, Treasury bill yields edged lower by one basis point to settle at 18.36 percent, indicating improved investor sentiment despite the uneven performance across maturities.
