Nigeria money market liquidity fluctuates amid OMO and Treasury bill settlements

Nigeria’s money market has experienced significant fluctuations in liquidity and interest rates driven by Treasury bill settlements and Open Market Operation (OMO) activities.

In one period, liquidity surplus in the financial system fell from ₦4.35 trillion to ₦3.57 trillion following ₦1.45 trillion in Treasury bill settlement debits and ₦2.60 trillion in OMO settlements. This tightening pushed the average funding cost up to 22.13% and the overnight lending rate to 22.25%. Despite the outflow, the system maintained a sizeable surplus, with some banks utilizing the Central Bank of Nigeria’s Standing Lending Facility to meet short-term needs.

Conversely, other market data indicated a spike in excess liquidity, which increased by approximately 36% to ₦7.40 trillion. This surge was supported by coupon inflows and stronger placements at the standing deposit window, which helped ease interbank rates. While the overnight rate saw slight adjustments, the market remained active with mixed directional moves in Treasury Bill yields across different tenors.