By Boluwatife Oshadiya | November 2, 2026
Key Points
- Excess liquidity in Nigeria’s financial system rises to ₦7.37 trillion from ₦6.94 trillion the previous week
- Overnight funding rate increases marginally by two basis points to 20.36%, while the reported funding rate remains at 20.00%
- CBN OMO bills attract ₦2.28 trillion in subscriptions against a ₦1 trillion offer, but total allotments reach only ₦244.94 billion
Main Story
Excess liquidity in Nigeria’s financial system rose to ₦7.37 trillion from ₦6.94 trillion the previous week, as money market rates remained broadly stable amid limited liquidity mop-up operations by the Central Bank of Nigeria (CBN).
Investment firm Cowry Asset Limited reported that Open Market Operations (OMO) maturities largely supported the liquidity surplus, despite a ₦71.16 billion settlement for the Nigerian Treasury bills auction conducted during the week.
The overnight rate edged up by two basis points to 20.36%, while the funding rate remained unchanged at 20.00%, according to the market update. Cowry attributed the subdued movement in funding costs, despite the larger liquidity surplus, to banks’ preference for holding excess cash and placing funds with the CBN.
In the interbank market, the Nigerian Interbank Offered Rate (NIBOR) declined across the one-, three- and six-month tenors. The rates fell by 23, 38 and 63 basis points to 20.49%, 20.71% and 20.91%, respectively.
The CBN also offered ₦1 trillion across 124-day and 138-day OMO instruments at its latest reported auction. Subscriptions reached ₦2.28 trillion, representing a bid-to-cover ratio of 2.28 times the amount offered.
However, the Bank allotted only ₦244.94 billion, equivalent to a sales-to-offer ratio of 0.24 times. The stop rates settled at 17.69% and 17.63% for the two instruments, respectively.
The strong subscription level indicates investor demand for short-term, high-yielding instruments, while the relatively low allotment suggests the CBN maintained a selective approach to absorbing excess liquidity.
What’s Being Said
Cowry Asset Limited said the increase in excess liquidity, alongside relatively stable funding costs, reflected banks’ preference for retaining surplus cash and placing funds with the CBN, limiting activity in the interbank market.
The firm’s update also linked the liquidity surplus largely to OMO maturities. However, the supplied material does not contain a direct quotation from Cowry Asset Limited or a separate response from the CBN or an independent market analyst.
What’s Next
- Interbank rates: Market participants will monitor whether the ₦7.37 trillion liquidity surplus translates into further changes in overnight and NIBOR rates.
- CBN liquidity operations: The Bank’s subsequent OMO auctions will show whether it increases allotments to absorb more funds from the banking system.
- Treasury bills market: Investor subscriptions and stop rates at the next auction will provide further evidence of demand for short-term government securities.
The Bottom Line:
The liquidity surplus is substantial, but its limited transmission into lower overnight funding costs suggests that excess cash is not automatically translating into more active interbank lending. The CBN’s OMO allotment decisions will remain central to how quickly that surplus affects short-term market rates.
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