By Boluwatife Oshadiya | August 17, 2026
Key Points
- Liquidity surplus fell to ₦3.57 trillion after Treasury bills and OMO settlements drained funds from the banking 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 the average funding cost higher to 22.13%.
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 outflows were partly offset by approximately ₦2.48 trillion in OMO maturities, leaving the banking system with a substantial liquidity surplus. Some banks also accessed ₦15.80 billion from the Central Bank of Nigeria’s (CBN) Standing Lending Facility to meet short-term funding requirements.
Despite the liquidity buffer, very short-term funding conditions tightened. The overnight lending rate rose 15 basis points to 22.25% at the close of trading on Friday, while the open repo rate remained unchanged at 22.00%.
Cowry Asset Limited reported that system liquidity opened at ₦4.07 trillion and peaked at ₦6.81 trillion, supported by OMO maturities and strong bank placements at the CBN’s Standing Deposit Facility window.
The latest movement indicates that the volume of liquidity in the system remains substantial, but government securities transactions and central bank operations are influencing how readily banks can access funds in the short-term market.
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
What’s Next
The money market will remain sensitive to upcoming Treasury bills and OMO transactions, as further debits or maturities could influence the amount of liquidity available to banks.
Funding rates will also remain a key indicator of short-term market conditions, particularly if the CBN continues to use open market operations to manage excess liquidity.
Bottom Line
The Bottom Line: Nigeria’s money market still has a sizeable liquidity surplus, but the latest rise in funding costs shows that aggregate liquidity is not translating into uniformly cheaper short-term funding. Treasury securities settlements and CBN liquidity operations remain important drivers of market pricing.
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