CBN PREPARES N4.69TN LIQUIDITY WITHDRAWAL

The Central Bank of Nigeria is preparing to withdraw N4.69tn from the financial system through Open Market Operations as banking-sector liquidity rises.

Liquidity in the banking system climbed to N8.84tn ahead of the settlement of the latest OMO bills, prompting the central bank to move to absorb excess cash.

The planned liquidity withdrawal is part of the CBN’s efforts to manage excess funds in the banking system and influence short-term money-market conditions.

The increase in liquidity followed recent inflows into the banking system, including maturing securities and other financial-system transactions.

The CBN uses OMO operations to regulate liquidity by selling or buying securities from financial institutions.

The latest move comes after the central bank recently adjusted its monetary policy stance, including reducing its benchmark interest rate to 23 per cent.

Market participants are monitoring the liquidity operation because large withdrawals can affect short-term interest rates and the availability of funds within the banking system.

The CBN has continued to use open-market operations alongside other monetary policy tools as it seeks to manage liquidity and maintain stability in the financial system.

The N4.69tn operation is expected to reduce part of the excess liquidity currently available to banks.