By Boluwatife Oshadiya | March 3, 2026
Key Points
- Overnight rate rose to 22.35% while Open Repo rate held at 22.00%
- Deposit Money Banks placed ₦4.3 trillion at CBN’s Standing Deposit Facility.
- System liquidity surplus increased to ₦4.38 trillion ahead of OMO and T-bill auctions.
Main Story
Money market rates closed mixed at the start of the week despite a sharp rise in system liquidity, as Deposit Money Banks (DMBs) placed ₦4.3 trillion at the Central Bank of Nigeria’s Standing Deposit Facility (SDF).
Data from FMDQ Group showed the overnight funding rate rose 18 basis points to 22.35% from 22.17%, while the Open Repo rate held steady at 22.00%, reflecting relative balance in interbank funding demand and supply.
Liquidity in the financial system expanded to ₦4.38 trillion on Monday, up from ₦3.74 trillion at the end of the previous week, according to market data from Anchoria Securities Limited.
AIICO Capital said the liquidity surge was primarily driven by DMB lodgements with the CBN amounting to ₦4.31 trillion. Analysts noted that increased SDF placements signal a cautious lending stance by banks amid uncertain macroeconomic conditions.
Despite the strong liquidity profile, short-term benchmark interest rates remained elevated at around 22% following the recent monetary policy rate adjustment.
Meanwhile, activity at the Standing Lending Facility (SLF) declined, indicating reduced funding pressures across the banking system.
In the secondary market for Nigerian Treasury Bills, the average benchmark yield declined by two basis points to 17.24%, while the Open Market Operations (OMO) secondary market recorded a three-basis-point drop to 20.23%, suggesting sustained investor demand.
What’s Being Said
Market analysts said the divergence in rates reflects positioning ahead of imminent liquidity-absorbing operations.
“Upcoming OMO and Treasury bills auctions are expected to mop up excess liquidity and ease potential inflationary pressures,” a fixed income analyst said in a market note.
Cowry Asset Management added that rising Nigerian Interbank Offered Rates (NIBOR) across tenors indicate lingering liquidity adjustments within the system.
What’s Next
- The CBN is expected to conduct Open Market Operations in the coming days to absorb excess liquidity
- An imminent Nigerian Treasury Bills auction will test investor appetite at current yield levels
- Market participants will monitor interbank rates to assess whether liquidity conditions tighten further
The Bottom Line: Elevated liquidity alongside firm short-term rates signals a market in transition. With the CBN preparing liquidity mop-up operations, the direction of yields in the coming weeks will determine whether funding conditions ease or tighten further for banks and investors.
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