System Liquidity Falls by N930bn, Overnight Lending Rate Inches Higher, CBN Reports

The Central Bank of Nigeria (CBN) says liquidity in the banking system dropped by N930 billion to N3.66 trillion, down from N6.81 trillion recorded on August 11.

According to the latest money-market data published by the apex bank on its website on Friday, the decline was attributed to the settlement of its Treasury Bills auction.

The CBN also disclosed that the overnight lending rate edged up by two basis points to 22.20 per cent, compared with 22.18 per cent as at August 11, while the Open Buy Back (OBB) rate held steady at 22.00 per cent.

The latest figures mark a pullback from the larger liquidity surplus seen in August, when the system opened at N6.81 trillion on August 11 following a N2.48 trillion inflow from matured Open Market Operations (OMO) securities.

The apex bank has continued to rely on OMO and Treasury Bills operations as tools for managing liquidity within the financial system. At its OMO auction on August 26, the CBN received subscriptions worth N4.26 trillion against N1 trillion offered, eventually allotting N2.80 trillion. The bank also recorded strong investor interest at its Treasury Bills auction held the same day, with subscriptions totalling N3.79 trillion against N700 billion offered, resulting in an allotment of N762.89 billion.

In August, the CBN revised its framework governing OMO participation and access to the Discount Window, opening up both the primary and secondary OMO markets to all eligible investors through Deposit Money Banks. Under the new arrangement, individuals, corporates and non-bank financial institutions can now participate in OMO transactions via their banks.

The apex bank also lifted its suspension on Tenored Repo Operations, permitting repurchase transactions with maturities ranging from four to 90 days — part of broader efforts to strengthen money-market functioning and liquidity management.

Despite the latest drop, the financial system remains in surplus, with liquidity standing at N3.66 trillion at the opening of Friday's market.