Nigeria's ₦4.66trn Liquidity Surplus Lowers Overnight Rate

As of September 8, Nigeria's banking system experienced a liquidity surplus of ₦4.66 trillion, significantly easing funding pressures and resulting in a decrease in the overnight lending rate to 22.13%, down 13 basis points from the previous week. This increase in liquidity from ₦3.6 trillion was primarily due to banks' placements at the Central Bank of Nigeria's Standing Deposit Facility (SDF) and inflows from maturing securities.

Cowry Asset Limited reported that approximately ₦4.4 trillion of the surplus was placed at the SDF, while ₦2.3 trillion in primary-market repayments contributed to the liquidity available to financial institutions. Despite improved liquidity conditions, the funding rate remained unchanged at 22 percent.

The Central Bank continued its liquidity management through Open Market Operations (OMO), absorbing excess cash from the financial system. The Financial Market Dealers Association projected total system inflows of ₦15.72 trillion for September, indicating a 16.1 percent increase from August.