Nigeria Money Market Stays Liquid Despite CBN Tightening as Billions Flow in from Maturities

Nigeria’s money market continued to show strong liquidity this week, even as the Central Bank of Nigeria maintained aggressive efforts to drain excess cash from the system. Market conditions remained largely supported by heavy inflows from maturing government securities, which helped offset the impact of ongoing liquidity mop-up operations.

System liquidity opened the week at N5.60 trillion, rising from N4.96 trillion the previous week, before closing slightly higher at N5.67 trillion. This strength was largely driven by N767 billion in Open Market Operations (OMO) maturities and N556.02 billion in Treasury bills repayments from the Debt Management Office, keeping cash levels elevated in the banking system.

Despite the strong liquidity position, short-term interest rates edged higher. The Nigerian Interbank Offered Rate (NIBOR) rose to 22.33%, reflecting modest pressure from liquidity withdrawals tied to OMO and Treasury bill auctions. However, funding rates remained relatively stable overall, with the overnight rate slightly easing, signaling that market liquidity is still resilient.

In the fixed income space, investor appetite remained strong, with demand for Treasury bills significantly outpacing supply. At the latest auction by the Debt Management Office, subscriptions hit N2.40 trillion against an offer of N700 billion, underscoring continued interest in low-risk government securities despite macroeconomic uncertainty.

Analysts say the outlook for the coming week remains liquidity-rich, supported by over N1 trillion in expected inflows from maturing OMO bills. However, they warn that continued liquidity mop-up actions by the Central Bank of Nigeria may keep short-term rates elevated, as policymakers attempt to balance inflation control with market stability.

source: Leadership