Nigeria’s financial system remained awash with liquidity this week as interbank rates posted a mixed performance, reflecting a balance between market inflows and regulatory moderation by the Central Bank of Nigeria (CBN).
Market data revealed that system liquidity surged following a ₦1.5 trillion disbursement from the Federation Account Allocation Committee (FAAC), a development that significantly expanded banks’ placement volumes. Analysts noted that the CBN’s restrained liquidity management stance helped stabilize short-term benchmark rates.
Financial institutions recorded reduced borrowing from the apex bank’s Standing Lending Facility (SLF), while placements under the Standing Deposit Facility (SDF) increased notably. Market observers say this indicates a healthy liquidity position across the banking sector, with most lenders operating comfortably above reserve thresholds.
Investment analysts reported that financial system liquidity opened the session with a credit balance of ₦3.8 trillion—representing a ₦659 billion rise from the previous day’s figure of ₦3.1 trillion. AIICO Capital Limited attributed the gain to substantial coupon payments totaling ₦261.4 billion and an increase in placements at the CBN’s SDF window, which now stands at ₦2.9 trillion.
Despite the liquidity boost, average funding costs rose marginally by two basis points. The Open Repo Rate (OPR) remained unchanged at 24.50%, while the Overnight (O/N) rate inched up to 24.86%, reflecting a cautious stance among market participants.
Analysts at Broadstreet Advisory expect funding costs to remain broadly stable in the near term, barring any major mop-up operations or unusual demand for funds.
During the previous week, market liquidity opened at ₦956.71 billion and closed much higher at ₦3.12 trillion, bolstered by FAAC inflows that outweighed the impact of Open Market Operations (OMO) and Nigerian Treasury Bills (NTB) auctions.
In the secondary Treasury Bills market, yields declined across all maturities on Monday. The 1-month, 3-month, 6-month, and 12-month tenors fell by 13bps, 12bps, 18bps, and 16bps, respectively. Consequently, the average NTB yield dropped to 17.41%, signaling renewed investor appetite for short-term government securities.
