Nigeria’s financial system liquidity surged to N4.66 trillion, easing short-term funding pressures across commercial banks and driving down interbank borrowing costs.
Funding pressure across Nigerian commercial banks softened as excess cash within the financial system surged to ₦4.66 trillion, driving short-term interbank borrowing costs lower.
The overall liquidity position climbed from ₦3.6 trillion recorded in the preceding week.
According to financial data from Cowry Asset Management Limited, the boost was primarily driven by ₦2.3 trillion in primary market repayments alongside substantial bank funds parked in the Central Bank of Nigeria’s (CBN) Standing Deposit Facility.
The increase in available cash helped ease short-term borrowing expenses among commercial banks. The overnight lending rate dropped by 13 basis points to settle at 22.13%, while the Open Repo rate held firm at 22.00%.
Importantly, financial institutions recorded zero transactions at the central bank’s Standing Lending Facility during the period. The absence of activity indicates that commercial banks had sufficient cash reserves on hand and did not need emergency short-term credit from the apex bank to meet daily liquidity requirements.
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The decline in short-term rates occurred even as the CBN continued its liquidity management efforts through Open Market Operations (OMO) absorbing a portion of excess funds from the banking system to keep money supply under control.
Looking ahead, financial liquidity is expected to remain healthy. The Financial Market Dealers Association projects total system inflows of ₦15.72 trillion for September a 16.1% increase from August’s ₦13.54 trillion figure. Maturing OMO instruments are projected to make up roughly 74% of these incoming funds though overall market liquidity will ultimately depend on how aggressively the CBN mops up excess cash through new security sales.
