Nigerian banks and discount houses borrowed N3tn from the Central Bank of Nigeria (CBN) through the Standing Lending Facility in one week, as reported by Afrinvest Research.
Meanwhile, deposits of N493.6bn were made through the Standing Deposit Facility.
This borrowing spike caused a 4.7% increase in system liquidity, now at N712.3bn.
The rise in borrowing reflects the increased demand for short-term liquidity as banks manage financial risks.
Despite this liquidity boost, inter-bank lending rates showed mixed results, with the Open Purchase Rate decreasing while the Overnight Rate slightly increased.
Afrinvest analysts also reported the successful launch of Nigeria’s first dollar-denominated bond, oversubscribed by $400m.
Experts caution that frequent borrowing from the CBN may signal deeper liquidity issues within banks, potentially leading to financial instability if not managed properly.
Increased borrowing may boost short-term liquidity, but it also raises concerns about interest obligations and the CBN’s broader monetary policy goals.
(PUNCH)