Nigeria’s money market experienced a significant liquidity boost as system liquidity expanded by 35.53% to hit ₦7.40 trillion marking a single-day increase of approximately ₦1.94 trillion.
Financial liquidity conditions in Nigeria’s money market eased on Wednesday, as a significant liquidity injection into the banking sector drove interbank rates downward.
According to AIICO Capital Limited, system liquidity expanded by 35.53 percent an influx of roughly ₦1.94 trillion from the previous session bringing the total to ₦7.40 trillion.
Coupon inflows alongside increased bank placements at the Central Bank of Nigeria’s Standing Deposit Facility propelled the liquidity expansion, highlighting substantial cash reserves ready for short-term deployment and investment.
Reduced dependence on the CBN’s lending window accompanied the strengthened liquidity profile. With zero reported activity at the Standing Lending Facility throughout the day, funding pressure subsided, pulling overnight borrowing rates lower.
Consequently, the overnight lending rate dipped by two basis points to 22.12 percent, while the Open Repo rate remained unchanged at 22.00 percent.
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Meanwhile, liquidity could see additional support from roughly ₦2.32 trillion in maturing Central Bank of Nigeria (CBN) Open Market Operation (OMO) securities. However, this potential boost was offset as the apex bank conducted a simultaneous OMO auction that drained approximately ₦2.8 trillion from the banking system.
These opposing flows shows that the CBN’s deliberate liquidity management strategy, aimed at draining excess market cash to prevent short-term interest rates from dropping too sharply.
Overall, heightened trading activity provided strong support, keeping sentiment firmly bullish across the fixed-income market.
