Excess Liquidity in Banking System Rises 57% to N6.8trn
Excess liquidity in the banking system increased sharply on Tuesday, up by about 57% to 6.81 trillion, according to market updates obtained by MarketForces Africa.
Despite a significant liquidity position, the short-term benchmark money market rates inched higher on one side, flattish on the other, while Nigerian Overnight Financing Rate (NOFR) was capped.
Banking expanded lodgement at the Standing Deposit Facility (SDF) of the Central Bank of Nigeria (CBN) in the absence of open market operation activities anticipated on Monday and Tuesday.
Meanwhile, the market recorded inflows from the Nigerian OMO bills that expired on 11-AUG-2026, but the authority allowed the inflow to pass ahead of the midweek auction.
The total OMO bills repayment totalling N2.48 trillion bolstered excess liquidity conditions in the banking system, with credit balance rising to N6.1 trillion on Tuesday.
The financial system continues to remain heavily loaded with funds, with deposit money banks (DMBs) channelling funds across short-term investment options.
The financial system liquidity edged higher by about 57% to N6.81 trillion, up from N4.35 trillion reported the previous day.
The monetary authority has been less aggressive with its liquidity management efforts this week. The surplus funding profile was also accommodated by N4.11 trillion placements by deposit money banks at the CBN’s SDF window.
However, funding conditions showed a slight divergence, as the Overnight rate edged up by 1bp to 22.10%, while the Open Repo rate remained unchanged at 22.00%.
Nigerian Overnight Financing Rate (NOFR) was flattish at 22% in the absence of a significant shift in the money market conditions.
Barring any significant liquidity shocks, the market anticipates funding rates to ease, supported by the current robust system liquidity level.
In the Treasury Bills secondary market, increased selling pressure drove the average yield higher by 5bps to 18.14%, reflecting a mildly bearish sentiment in the market. #Excess Liquidity in Banking System Rises 57% to N6.8trn CBN to Offer N700 bln in Nigerian Treasury Bills for Subscription
