By Boluwatife Oshadiya | August 24, 2026
Key Points
- Banking system liquidity rose 25.35% week-on-week to ₦4.47 trillion after ₦3.01 trillion in Federation Account Allocation Committee inflows
- Overnight rates eased as liquidity inflows outweighed ₦805.2 billion in Federal Government bond settlement outflows
- Average Treasury bill yield increased three basis points week-on-week to 18.57% ahead of the latest primary market auction
Main Story
Nigeria’s money market recorded stronger liquidity and softer short-term funding rates as ₦3.44 trillion in major inflows outweighed bond settlement outflows during the review period.
Banking system liquidity increased 25.35% week-on-week to ₦4.47 trillion from ₦3.57 trillion, supported by ₦429 billion in primary market repayments and approximately ₦3.01 trillion from the Federation Account Allocation Committee (FAAC), according to the market data supplied for the period.
The inflows more than offset ₦805.2 billion in settlements from the Federal Government of Nigeria (FGN) bond auction, allowing liquidity conditions to remain broadly comfortable.
Data from the FMDQ platform showed that the overnight rate declined by 16 basis points to 22.36%, while the Open Repo Rate (OPR) remained unchanged at 22.00%. The Overnight Nigerian Interbank Offered Rate (NIBOR), however, increased marginally by two basis points to 22.23%, indicating some residual pressure at the short end of the market.
The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction during the period, leaving excess liquidity in the banking system largely unsterilised.
In the Treasury bills market, trading remained relatively subdued as investors positioned ahead of the primary market auction. The average Treasury bill yield settled at 18.57%, representing a three-basis-point increase week-on-week.
Cowry Asset Limited said investor appetite remained influenced by expectations around the primary market auction and prevailing liquidity conditions.
“The modest rise in average yields indicates that, despite pockets of buying interest, investors continued to demand attractive entry levels amid expectations surrounding the upcoming primary auction and prevailing liquidity dynamics,” Cowry Asset Limited said.
The easing of headline inflation to 15.43% in July 2026 also improved the real-return outlook for fixed-income investors, with nominal Treasury bill yields remaining above the inflation rate.
What’s Being Said
“Given the dominance of the longer tenor in the offer structure, competition for the 364-day bill is expected to remain strong as investors seek to secure relatively high yields for an extended period,” Cowry Asset Management Limited said.
The firm expects auction rates to remain broadly aligned with secondary-market levels, although stronger demand could place downward pressure on yields.
What’s Next
The market will focus on the upcoming primary Treasury bills auction, where investors are expected to assess available yields against elevated system liquidity and the latest inflation data.
Secondary-market activity is also likely to remain sensitive to expectations of lower spot rates, particularly as investors reassess the relative attractiveness of short- and long-duration fixed-income instruments.
Bottom Line
The Bottom Line: Higher system liquidity is easing immediate funding pressure, but it has not translated into a broad decline in fixed-income yields. Investors remain focused on securing attractive Treasury bill returns before further liquidity and inflation-driven repricing pushes rates lower.
