CBN to Withdraw N4.69 Trillion Amid Rising Liquidity

The Central Bank of Nigeria (CBN) is preparing to withdraw N4.69 trillion from the banking system as liquidity surged to N8.84 trillion, a 37.01 percent increase from N6.45 trillion, according to market data from AIICO Capital Limited. This increase reflects the impact of Open Market Operation (OMO) maturities and other inflows.

Despite the CBN's efforts to absorb surplus cash through government securities sales, the liquidity buildup has persisted. On Tuesday, the CBN offered N2.5 trillion in OMO bills across three maturities, with strong investor demand raising the total to approximately N5 trillion.

The settlement of these transactions is expected to significantly reduce cash available to banks, potentially altering short-term money-market rates. Analysts noted a modest increase in overnight borrowing costs, with the overnight lending rate rising by 28 basis points to 20.86 percent.

The Nigerian Overnight Financing Rate remained at 20 percent, while the average Treasury bill rate stayed at 17.84 percent.