Nigeria's Overnight Lending Rate Hits 22.20% Amid Tightening

Nigeria's overnight lending rate increased by 2 basis points to 22.20% as the banking system adjusted to the effects of recent Central Bank of Nigeria (CBN) treasury bills transactions, which drained liquidity from the financial market. The open buyback rate remained steady at 22%.

The increase in the overnight rate was attributed to tighter liquidity conditions following the settlement of the CBN’s midweek treasury bills auction. Data from Herwood Securities Limited indicated that system liquidity opened at a N3.66 trillion credit balance, down from N4.61 trillion in the previous session, due to government securities purchased by banks and other investors.

The CBN's aggressive sterilisation programme, which included the sale of N2.888 trillion in Open Market Operations (OMO) bills, further impacted liquidity. Despite the drain, the banking system remained in surplus.

Market participants anticipate stability in overnight and OBB rates, contingent on the absence of further large-scale liquidity withdrawals by the CBN.