Money market indicators closed the session on a divergent note as liquidity within Nigeria’s financial system contracted sharply, declining by roughly 60 percent following significant settlement obligations tied to Central Bank of Nigeria (CBN) open market operations.
The steep liquidity squeeze was largely attributed to the settlement of approximately ₦2.7 trillion in Open Market Operation (OMO) bills issued to foreign portfolio investors and domestic deposit money banks. The transaction triggered a substantial cash outflow, tightening conditions across the interbank market.
Market data showed that system liquidity opened at ₦1.66 trillion, representing a significant decline from the prior day’s balance. The contraction reflects the CBN’s continued effort to recalibrate market liquidity and maintain a more sustainable funding environment through aggressive liquidity management tools.
In tandem, bank placements at the CBN’s Standing Deposit Facility (SDF) declined notably, underscoring the ongoing absorption of excess liquidity. According to figures from TrustBanc Financial Group Limited, total placements at the SDF window fell by 35 percent to ₦1.76 trillion, as banks adjusted their short-term positioning amid tighter funding conditions.
Despite the overall liquidity squeeze, activity was recorded at the CBN’s Standing Lending Facility (SLF), where market participants accessed ₦235 billion to meet short-term funding gaps. AIICO Capital Limited noted that this borrowing reflected selective liquidity stress among banks navigating settlement pressures.
On the fixed income front, the apex bank conducted a Treasury bills auction, offering ₦1.15 trillion across 91-day, 182-day, and 364-day maturities. Subscription levels matched the offer size, with the full amount allotted at elevated stop rates, reinforcing the prevailing high-interest-rate environment.
The tightening liquidity conditions translated into higher funding costs. Average interbank funding rates rose by four basis points to 22.65 percent. While the Open Repo Rate (OPR) remained unchanged at 22.50 percent, the Overnight Rate (OVN) climbed by eight basis points to close at 22.79 percent.
Looking ahead, analysts expect liquidity to remain relatively stable despite a net Nigerian Treasury Bills settlement scheduled later in the week. Funding rates are projected to hover around current levels as market participants continue to price in the CBN’s firm liquidity stance.
 open market operations.){kind=link}