Banks Placement, OMO Inflows Keep Money Market Liquid
Banks’ placement at the Central Bank of Nigeria (CBN) standing deposit facility (SLF) and additional inflows from expired OMO bills kept money market liquidity in surplus.,
However, liquidity is expected to ease following a significant OMO bill sales to banks and foreign portfolio investors at the CBN open market operation on Tuesday.
According to AIICO Capital Limited, the financial system liquidity opened with an improved surplus balance of ₦5.87 trillion, up from ₦3.57 trillion – an increase of N2.31 trillion on the day.
Liquidity conditions remained supported by banks’ sustained lodgment at the CBN’s standing deposit facility, totalling ₦3.62 trillion.
The amount was further buoyed by ₦2.16 trillion inflow from 21-Apr-26 OMO maturities, offset by ₦800 million borrowings by some smaller lenders at the standing lending facility window.
However, average funding cost rose by 3bps to 22.15%, according to analysts. The Open Repo Rate (OPR) remained flat at 22.00%, while the Overnight Rate (OVN) climbed 6bps to 22.29%.
During the day, the CBN held an OMO auction, where ₦600 billion was offered, ₦2.22 trillion was subscribed, and ₦1.92 trillion was allotted. The settlement for the auction is anticipated to reduce liquidity surplus.
Nigerian Interbank Offered Rates (NIBOR) recorded mixed movements across tenors on Tuesday. The overnight and 6- month rates remained unchanged at 22.32% and 24.15%, respectively.
Meanwhile, the 1-month and 3-month NIBOR inched higher by 7 and 1 basis points to 22.91% and 23.51%, respectively, reflecting relatively tight system liquidity.
In the secondary market, the average yield on Nigerian Treasury bills edged up by 2 basis points to 17.44%, reflecting mild investor demand and pockets of sell-offs across the fixed-income market.
