Rates Diverge as OMO Inflow, Banks Lodgment Boost Liquidity
The overnight lending rate surged while the repo rate remained steady as money market liquidity increased, supported by primary market repayment and the absence of monetary action.
According to data obtained from the FMDQ platform, the overnight rate climbed by 20 basis points, but the repo rate was steady around the money market floor rate amidst fluctuation in system liquidity.
The banking system liquidity opened the day with surplus balance of ₦2.24 trillion, representing a significant increase from previous surplus level of ₦596.46 billion.
The improvement was largely driven by an inflow of ₦1.03 trillion from 03-Feb-2026 OMO maturity, according to AIICO Capital Limited.
In addition, Deposit Money Banks (DMBs) placements at CBN’s Standing Deposit Facility (SDF) totaling ₦1.26 trillion enhanced the financial system liquidity conditions ahead of the mid-week treasury bills auction.
While cash-rich commercial banks are targeting 22.50% standing deposit rate, small lenders were at the borrowing window to augment their liquidity requirements.
With a slight strain on liquidity, some tier-2 banks raised ₦215.10 billion through the Standing Lending Facility (SLF) window. The average funding cost rose 10bps to 22.90%, AIICO Capital said in its note.
Money market rates: Open Repo Rate (OPR) held steady at 22.60%, while the Overnight Rate (OVN) spiked by 20bps to 23.20.%. Analysts said, barring any funding activities, they expect funding costs to remain at a similar level, ahead of the NTB auction. After Spot Rates Hike, DMO Reopens 7, 10-Year Bonds for Sale
