Nigeria’s overnight interbank lending rate rose to 22.20%, reflecting a minor uptick in short-term borrowing costs as system liquidity across commercial banks tightened.
Nigeria’s interbank overnight lending rate increased slightly by two basis points to reach 22.20% following a reduction in available excess cash within the banking system.
The shift occurred after the Central Bank of Nigeria (CBN) completed settlements for its latest Treasury Bills auction.
Despite the rate increase, the Open Buyback (OBB) rate held steady at 22.00% reflecting a stable floor for short-term borrowing among financial institutions.
Financial system liquidity opened at ₦3.66 trillion, marking a notable drop of roughly ₦930 billion compared to the previous trading session’s balance of ₦4.61 trillion. The decrease was primarily caused by commercial banks transferring funds to the central bank to pay for newly issued Treasury Bills.
As cash moved out of commercial banks to settle these short-term government investments, the overall pool of immediate funds shrank. This temporary drop in available cash pushed up the cost for banks borrowing from one another overnight to meet immediate operational requirements.
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Even with the ₦930 billion reduction, the Nigerian banking system continues to operate with a healthy cash surplus. Market analysts noted that the slight rate increase points to minor short-term tightening rather than a severe cash shortage.
Looking ahead, financial liquidity is expected to remain stable supported by an upcoming injection of ₦734.81 billion from maturing Treasury Bills. As these funds flow back into commercial banks, short-term borrowing costs are expected to stay near current levels without significant upward pressure.
