Central Bank of Nigeria reports N930bn drop in banking liquidity

Liquidity in the Nigerian banking system has decreased by N930 billion, falling to N3.66 trillion from the N6.81 trillion recorded on August 11. The Central Bank of Nigeria (CBN) attributed this decline to the settlement of its Treasury Bills auction.

As a result of the liquidity shift, the overnight lending rate rose by two basis points to 22.20 per cent, up from 22.18 per cent on August 11. The Open Buy Back (OBB) rate remained steady at 22.00 per cent. Despite the recent drop, the financial system maintains a surplus.

The CBN continues to utilize Treasury Bills and Open Market Operations (OMO) to manage financial system liquidity. Recent auctions have seen significant demand, including an OMO auction on August 26 that received N4.26 trillion in subscriptions against N1 trillion offered. Additionally, the bank has revised its OMO participation framework to allow individuals, corporates, and non-bank financial institutions to participate through deposit money banks.