Nigerian Banks' SDF Balances Plummet 42% Amid CBN's Aggressive Liquidity Mop-Up

The Central Bank of Nigeria's intensified liquidity mop-up strategy has led to a significant 42.3% decline in commercial banks' SDF balances within a week, from N6.07 trillion on October 2 to N3.5 trillion on October 8, 2025. This move is part of CBN's efforts to control inflation, defend the Naira, and reduce excess liquidity in the financial system.

The tightening monetary stance includes measures like cash reserve ratio (CRR) debits and open market operations (OMO) auctions to absorb surplus funds. The aim is to limit speculative forex demand, stabilize the Naira, and align with the CBN's inflation target framework amidst elevated consumer prices.