Nigeria’s Banking System Liquidity Holds Above ₦8 Trillion Despite ₦2.36 Trillion CBN OMO Mop-Up
Nigeria’s banking system liquidity held steady above ₦8 trillion despite a ₦2.36 trillion Open Market Operations (OMO) mop-up by the Central Bank of Nigeria (CBN), signaling persistent excess funds circulating in the financial system. The mid-week data, following the CBN’s OMO auction on March 23, 2026, shows that liquidity inflows remain robust, limiting the immediate impact of the apex bank’s aggressive intervention.
The CBN’s ₦2.36 trillion OMO issuance aimed to curb excess liquidity, which opened the week at over ₦8.06 trillion. Initial figures on March 23 showed opening balances at ₦85.04 billion, reflecting a short-term liquidity squeeze. However, the tightening was fleeting, as broader system liquidity surged again to ₦7.98 trillion by March 25, suggesting strong underlying inflows and limited long-term effects of the mop-up.
A key factor supporting elevated liquidity levels is the use of the Standing Deposit Facility (SDF), where banks park surplus funds with the CBN. SDF balances opened the week at ₦8.17 trillion, dipped to ₦6.59 trillion on March 24, and rebounded to ₦7.97 trillion by March 25. The consistent rise in SDF deposits indicates banks’ preference for risk-free returns amid market uncertainties and underscores the persistent liquidity surplus despite OMO interventions.
Analysts attribute the sustained high liquidity to inflows from maturing securities and limited absorption via OMO auctions. Banks have increasingly parked excess funds in the SDF, attracted by its overnight interest rate of around 22.28%. Recent maturities of ₦1.44 trillion and ₦579 billion in securities have further added to idle funds, reflecting structural imbalances in Nigeria’s financial system and reinforcing the need for continued monetary management.
Elevated liquidity poses risks to interest rate stability, could fuel inflationary pressures, and may encourage speculative activity in the forex market. Experts suggest that the CBN may need sustained, large-scale liquidity mop-ups to achieve desired monetary outcomes. The persistence of this liquidity glut highlights the challenges facing Nigeria’s banking system and signals that aggressive intervention measures may remain necessary in the near term.
source: nairametrics