CBN FACES N8.57TN LIQUIDITY INFLOW THIS WEEK

Nigeria’s banking system could see liquidity rise to about N8.57tn this week as maturing Open Market Operations bills and bond coupon payments release more funds into the financial system.

System liquidity had already increased to N5.98tn in the week ended September 25, up from N2.86tn the previous week. The rise followed the repayment of about N2.3tn in OMO bills on September 22.

A further N2.43tn in OMO bills is expected to mature this week, while bond coupon payments could add about N164bn. If banks retain most of the funds, total system liquidity could reach approximately N8.57tn.

The increase comes after the Central Bank of Nigeria cut its Monetary Policy Rate by 350 basis points to 23 per cent at its September 22 meeting.

Money market rates subsequently declined, with the overnight rate falling to 20.77 per cent from 22.24 per cent, while the funding rate dropped to 20.40 per cent from 22 per cent.

Banks also placed more than N7tn with the CBN’s Standing Deposit Facility during the week, indicating the level of excess cash already available in the system.

The fresh inflows could increase pressure on the CBN to withdraw excess liquidity through additional OMO operations.

At its September 24 OMO auction, the apex bank offered N1tn in bills but received bids worth N6.1tn and allotted N2.3tn.