CBN Faces Liquidity Challenge with N2.45tn Inflows

The Central Bank of Nigeria (CBN) is encountering a new liquidity management challenge as N2.45tn is projected to flow into the banking system this week, mainly from maturing Open Market Operations (OMO) securities. This influx follows the CBN's aggressive liquidity withdrawal strategy, which included the allotment of N5.667tn through two OMO auctions within six days.

On 10 November, the CBN offered an additional N1.5tn in OMO bills, marking its third auction between 3 November and 10 November. Despite these efforts, banking system liquidity rose to N8.505tn by the close of trading on 6 November, up from N7.373tn the previous week.

The Financial Market Dealers Association reported that OMO maturities will contribute N2.298tn to the expected inflows, which is a 13.99 per cent increase from the previous week. The CBN's recent operations have led to a reduction in excess funds at its Standing Deposit Facility, with deposits declining to N5.915tn on 9 November from N8.311tn on 6 November.