By Boluwatife Oshadiya | August 5, 2026, 2:49 PM
Key Points
- Financial system liquidity increased by 5.46% to ₦5.33 trillion, supporting lower overnight funding costs
- Overnight lending rate declined by one basis point to 22.14%, while the Nigeria Overnight Financing Rate remained steady at 22.20%
- The Central Bank of Nigeria allotted ₦2.17 trillion in OMO bills despite offering ₦600 billion, reflecting sustained investor demand
Main Story
Nigeria’s overnight lending rate eased marginally as liquidity in the financial system strengthened to ₦5.33 trillion, supported by surplus cash balances ahead of the settlement of the Central Bank of Nigeria’s (CBN) recent Open Market Operation (OMO) bill auction.
Opening system liquidity rose by 5.46% from ₦5.05 trillion to ₦5.33 trillion, creating ample cash within the banking system and reducing pressure on short-term funding rates.
The improvement in liquidity followed recent OMO operations by the CBN. Although the apex bank offered ₦600 billion worth of OMO bills at its latest auction, it eventually allotted ₦2.17 trillion, with stop rates settling at 20.35% and 20.15%, highlighting strong investor appetite for the securities.
Despite the sizeable OMO allotment, liquidity conditions remained elevated. Consequently, the Nigeria Overnight Financing Rate (NOFR) held steady at 22.20%, while the Overnight (O/N) rate declined by one basis point to 22.14%.
Activity at the CBN’s Standing Deposit Facility (SDF) also slowed considerably. Deposit Money Banks reduced placements to ₦2.61 trillion from ₦4.62 trillion, suggesting that banks retained more liquidity within the interbank market following Tuesday’s OMO settlement.
Data released by Cowry Asset Management Limited showed that the Nigerian Interbank Offered Rate (NIBOR) remained unchanged across key maturities. Overnight, one-month, three-month and six-month tenors closed at 22.21%, 22.64%, 23.22% and 23.59%, respectively.
In the Treasury bills secondary market, trading produced mixed yield movements. Yields on the one-month, three-month and 12-month instruments declined by one basis point, one basis point and 10 basis points, respectively, while the six-month tenor rose by three basis points. Overall, sustained investor demand kept the average Treasury bill yield unchanged at 18.15%.
What’s Being Said
“Opening liquidity improved to ₦5.33 trillion from ₦5.05 trillion, while the Nigerian Interbank Offered Rates remained unchanged across all monitored tenors,” Cowry Asset Management Limited said in its daily market update.
What’s Next
- Market participants will monitor whether the CBN conducts additional OMO auctions to absorb excess liquidity in the banking system.
- Investors are expected to continue tracking interbank funding rates and Treasury bill yields for signs of changing liquidity conditions.
- Money market analysts expect liquidity to remain relatively strong in the near term if there are no significant CBN liquidity-tightening operations.
The Bottom Line:
The rise in banking system liquidity continues to ease short-term funding pressures despite the CBN’s aggressive OMO issuance. If excess liquidity persists without additional sterilisation measures, money market rates are likely to remain relatively stable while supporting continued demand for government securities.
