Nigeria banking system liquidity reaches N6.94 trillion

Liquidity within the Nigerian banking system has surged, with the net liquidity surplus rising to N6.94 trillion, up from N6.28 trillion the previous week. Total system liquidity reached a weekly peak of N8.4 trillion, driven by significant inflows from matured Open Market Operation (OMO) bills, expired Treasury bills, and primary market repayments.

In response to the liquidity overhang, the Central Bank of Nigeria (CBN) conducted an OMO auction on Thursday, offering N2 trillion in 138-day and 180-day instruments. The auction saw high demand, with subscriptions reaching N2.7 trillion, leading the apex bank to allot N2.6 trillion. Stop rates for the instruments settled at 17.63% and 17.14%, respectively.

Commercial banks have increasingly utilized the CBN’s Standing Deposit Facility (SDF), with balances climbing to N7.9 trillion. This trend suggests a preference among lenders to park unutilized funds with the central bank rather than deploying them into the real economy, amid concerns regarding a decline in private-sector credit.