CBN Releases N2.87tn into Banking System in October

In October, the Central Bank of Nigeria (CBN) reduced its liquidity mop-up through Open Market Operations (OMO), allowing N2.87tn to remain in the banking system as repayments on maturing securities exceeded new sales. The CBN allotted N6.182tn in new OMO bills against N9.051tn in maturities, marking a significant shift from September's aggressive tightening, where N17.51tn was sold against N10.89tn in maturities, resulting in a net withdrawal of N6.62tn.

The moderation in OMO issuance coincided with a 56.75 per cent increase in banking system liquidity, rising to N7.373tn in October from N4.703tn in September. This change was evident towards the end of October when the CBN reduced its allotments at its final OMO auction.

The FMDA projected N13.79tn in inflows from maturing securities and government payments in November, although these do not guarantee a permanent increase in liquidity. The Nigeria Overnight Financing Rate remained unchanged at 20 per cent, while the Monetary Policy Rate stayed at 23 per cent.