By Boluwatife Oshadiya| May 19, 2026
Key Points
- System liquidity rose to about ₦5.9 trillion from ₦5.7 trillion week-on-week
- Open Repo and Overnight lending rates remained stable at 22.0% and 22.2%
- Analysts expect funding conditions to stay stable despite fresh OMO issuances
Main Story
Short-term funding rates in Nigeria’s money market remained broadly stable last week despite a significant increase in liquidity levels within the banking system.
Market data showed that system liquidity closed at approximately ₦5.9 trillion, compared to ₦5.7 trillion in the previous week, supported largely by inflows from maturing Open Market Operation (OMO) bills.
Despite the improved liquidity position, the Open Repo Rate (OPR) remained unchanged at 22.0%, while the Overnight (O/N) lending rate closed steady at 22.2%.
Analysts attributed the stable rates to effective liquidity management by the Central Bank of Nigeria, which continued aggressive market sterilisation through OMO auctions.
CSL Stockbrokers stated that funding conditions are expected to remain relatively stable in the near term unless the financial system experiences major liquidity shocks.
Analysts also projected that anticipated inflows from maturing securities — including ₦634.47 billion in Nigerian Treasury Bills and ₦2.25 trillion in OMO bills — would support liquidity conditions in the market.
Last week, the apex bank offered ₦600 billion in OMO bills across various maturities. The auction attracted subscriptions totaling ₦2.7 trillion, underlining strong investor appetite for fixed-income instruments.
Total allotments stood at approximately ₦1.6 trillion, comprising ₦25 billion for the 30-day tenor at 21.5%, ₦91 billion for the 70-day tenor at 20.7%, and ₦1.45 trillion for the 126-day tenor at 20.1%.
Meanwhile, activity in the Treasury bills secondary market remained mixed but positive overall. Average benchmark yields declined marginally by eight basis points to 17.5% as investors continued favouring short-dated instruments.
The Issues
Nigeria’s financial system has continued to witness elevated liquidity levels driven by maturing government securities and periodic fiscal injections into the banking sector.
The CBN’s aggressive liquidity mop-up strategy reflects broader concerns over inflationary pressures and exchange rate stability. While high interest rates have helped attract foreign portfolio inflows, analysts caution that elevated borrowing costs could weigh on private sector credit growth and economic expansion.
Market participants also remain cautious due to global risk-off sentiment and uncertainty surrounding capital flows into emerging markets.
What’s Being Said
“Funding conditions are expected to remain relatively stable in the near term, barring any significant liquidity shocks,” CSL Stockbrokers said in its market commentary.
“Investor appetite for short-dated instruments remains strong as market participants continue to prioritise liquidity and capital preservation,” fixed-income analysts stated.
What’s Next
- Investors will monitor upcoming Treasury bills and OMO auctions for changes in stop rates and allotment volumes
- Market participants are awaiting further signals from the CBN regarding liquidity management strategy
- Analysts expect short-term yields to remain elevated amid persistent inflation concerns and tight monetary policy conditions
The Bottom Line: Stable funding rates despite rising liquidity levels suggest the CBN’s liquidity management operations are currently containing volatility in the money market. However, the sustained dependence on high-yield instruments to absorb excess liquidity reflects the broader challenge of balancing inflation control with economic growth support.
