Excess liquidity in the Nigerian money market surged to about ₦6.6 trillion after the Central Bank of Nigeria (CBN) refunded some banks for excess cash reserve ratio (CRR) holdings, even as it stayed out of the market despite heavy inflows from maturing instruments.
The apex bank’s absence allowed liquidity to build up, with deposit money banks (DMBs) channeling placements into the CBN’s Standing Deposit Facility (SDF). Following its recent interest rate adjustment, the CBN’s refunds bolstered system liquidity further.
Interbank rates eased to below 35%, reflecting the scale of available liquidity and the impact of the new monetary policy rate asymmetric corridor. Until the next Monetary Policy Committee (MPC) meeting, banks will borrow from the CBN at 29.5%—a 50-basis-point cut—while deposits at the apex bank now attract 24.5%, above the average one-year Treasury bill yield.
According to AIICO Capital Limited, system liquidity improved to ₦6.57 trillion on Tuesday, boosted by a ₦731.14 billion inflow from the September 30 OMO maturity and higher DMB deposits with the CBN. Banks placed a total of ₦5.54 trillion at the SDF window at 24.5%.
On the FMDQ platform, the Open Repo Rate (OPR) closed flat at 24.50%, while the Overnight Rate (OVN) dipped by eight basis points to 24.92%. AIICO Capital noted that interbank rates are expected to remain stable at current levels in the absence of fresh open market operations.
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