By Boluwatife Oshadiya | August 21, 2026
Key Points
- Liquidity surplus fell to ₦3.57 trillion after Treasury bills and OMO settlements drained funds from the financial system
- Average funding cost rose eight basis points week-on-week to 22.13%
- Overnight lending rate climbed 15 basis points to 22.25% despite a sizeable liquidity buffer
Main Story
Money market liquidity tightened as Treasury bills and open market operation (OMO) settlements drained funds from Nigeria’s financial system, pushing average funding costs higher.
According to Cowry Asset Limited, the intermarket credit balance fell from an opening surplus of ₦4.35 trillion to ₦3.57 trillion after ₦1.45 trillion in Treasury bills debits and ₦2.60 trillion in OMO settlements.
The Central Bank of Nigeria (CBN) also sterilised about ₦2.5 trillion through its OMO auction, while the financial system received approximately ₦2.48 trillion from maturing OMO bills.
The combined transactions reduced excess liquidity, although the system retained a sizeable surplus. Some banks also accessed ₦15.80 billion through the CBN’s Standing Lending Facility to meet short-term funding requirements, Cowry Asset said.
Despite the liquidity buffer, average funding costs increased by eight basis points week-on-week to 22.13%. The overnight lending rate also rose by 15 basis points to 22.25% at the close of trading on Friday.
The open repo rate remained unchanged at 22.00%, indicating relatively stable pricing in another segment of the very short-term funding market.
Cowry Asset reported that system liquidity opened at ₦4.07 trillion and peaked at ₦6.81 trillion, supported by OMO maturities and bank placements at the CBN’s Standing Deposit Facility window.
What’s Being Said
“The liquidity outflows were partly offset by approximately ₦2.48 trillion in OMO maturities, leaving the system with a still-sizeable surplus.” — Cowry Asset Limited
The firm’s assessment indicates that the latest tightening was driven more by the timing and scale of government securities settlements and central bank operations than by an outright shortage of liquidity.
What’s Next
- Upcoming Treasury bills and OMO transactions will determine the next major liquidity movements in the money market
- Funding rates will remain a key indicator of how quickly banks can absorb further liquidity debits or maturities
The Bottom Line:
Nigeria’s financial system continues to hold a substantial liquidity surplus, but the latest increase in funding costs shows that aggregate liquidity does not automatically translate into cheaper short-term funding. The timing of CBN operations, securities settlements and maturities remains critical to money-market pricing.
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