Excess Liquidity in Banking System Soars 37% Ahead of OMO Debit
Excess liquidity in the banking system increased by 37% amidst significant OMO bill sales to investors by the Central Bank of Nigeria (CBN) on Tuesday.
In an effort to keep market liquidity in check, the Apex Bank floated N2.5 trillion in OMO bills across three tenors, and eventually raised about N5 trillion.
Ahead of the OMO bills settlement, the financial System liquidity rose 37.01% to N8.84 trillion from N6.45 trillion, investment firm AIICO Capital Limited revealed.
Market analysts reported that the surplus credit was more than double its start-of-year level of N3.82 trillion, reflecting OMO repayments and other inflows into the money market.
The robust funding profile, which had kept short-term benchmark interest rates in check, however, failed to deliver amid the latest shifts in market dynamics.
Broadstreet analysts reported that the overnight lending rate rose by 0.28 percentage points to 20.86%, while the overnight policy rate held at 20.50%.
Meanwhile, the Nigerian Overnight Financing Rate stayed at the 20% floor of the corridor set by last week’s cut in the monetary policy rate to 23%. The average Treasury bill rate was unchanged at 17.84%, according to AIICO Capital Limited.
The firm expects overnight rates to stay near the 20% floor as long as liquidity remains above ₦8 trillion, until the settlement of Tuesday’s ₦4.69 trillion OMO sale drains cash.

