By Boluwatife Oshadiya | March 13, 2026
Key Points
- Financial system liquidity declines 7.23% to ₦6.55 trillion after Treasury bills auction
- Overnight lending rate rises to 22.30% while Open Repo rate remains stable at 22.00%
- Treasury bills yields increase across maturities amid tighter money market conditions
Main Story
Nigeria’s interbank money market recorded mixed movements in repo and overnight lending rates after liquidity in the financial system declined sharply following the midweek Treasury bills auction.
Data from market analysts showed system liquidity fell by 7.23% to ₦6.55 trillion, down from ₦7.06 trillion recorded earlier in the week, reflecting a contraction in banking sector deposits held at the Central Bank of Nigeria’s Standing Deposit Facility (SDF).
The decline was largely driven by a ₦271.49 billion drop in SDF balances, alongside a ₦222.37 billion surplus of Treasury bills sales over repayments in the primary market, which effectively withdrew funds from the banking system.
As liquidity tightened, short-term lending rates moved in different directions. Data from the FMDQ Securities Exchange platform showed the Overnight rate rose by 15 basis points to 22.30%, while the Open Repo rate held steady at 22.00%, reflecting moderate funding pressure among banks.
Interbank benchmark rates also posted varied movements. The Nigerian Interbank Offered Rate (NIBOR) for overnight funds increased by eight basis points to 22.29%, signalling reduced liquidity availability. The one-month tenor climbed by 25 basis points, while the three-month and six-month tenors declined by seven and 28 basis points respectively, suggesting uneven funding conditions across the short-term market.
In the Treasury bills secondary market, yields rose across all maturities as investors repositioned after the primary auction. Yields on the one-month, three-month, six-month and twelve-month bills increased by 11 basis points, five basis points, 15 basis points and six basis points respectively.
Despite the rise in short-term yields, the average Treasury bills yield edged down slightly by one basis point to 17.57%, indicating improving investor sentiment and sustained demand for government securities.
The Issues
Liquidity fluctuations in Nigeria’s money market have become increasingly tied to the Central Bank of Nigeria’s liquidity-management operations, particularly Treasury bills auctions and adjustments in standing facilities.
When the CBN sells more securities than it redeems, the process effectively mops up excess liquidity from banks, tightening funding conditions in the interbank market. This often results in higher overnight rates as banks compete for short-term funds.
Analysts say these liquidity adjustments remain a key tool in the CBN’s broader strategy to stabilise the naira and manage inflationary pressures, particularly as monetary authorities maintain tight financial conditions across the economy.
What’s Being Said
“System liquidity declined due to a significant reduction in standing deposit facility balances following the Treasury bills auction settlement,” analysts at Meristem Securities Limited said in a market note.
“NIBOR rates showed mixed movements with the overnight tenor rising to 22.29 percent, reflecting tighter liquidity conditions within the banking system,” analysts at Cowry Asset Management Limited stated.
What’s Next
- The next Treasury bills auction by the Central Bank of Nigeria is expected to provide further signals on liquidity direction in the coming week.
- Investors will also monitor money market rates and interbank funding conditions for signs of tightening or easing liquidity.
- Analysts expect liquidity to fluctuate as the CBN continues using open market operations and Treasury bill issuances to manage inflation and currency stability.
The Bottom Line:
Nigeria’s interbank rates are responding directly to tighter liquidity conditions triggered by government securities sales. For investors and banks, short-term funding costs will likely remain volatile as the Central Bank continues aggressive liquidity management to stabilise the financial system.
