SAT AUG 29 2026-theGBJournal| Nigeria’s overnight lending rate rose 8 basis points week-on-week to 22.2%, as cash outflows from Open Market Operations (OMO) and net Nigerian Treasury Bills (NTB) Primary Market Auction (PMA) debits offset a portion of the liquidity injected through maturing OMO instruments.
The OMO debit of N4.72 trillion and net NTB PMA debit of N333.65 billion outweighed N2.32 trillion in OMO maturities, putting some upward pressure on the overnight rate during the week.
Despite the liquidity-draining operations, however, the banking system remained well funded. Average Standing Deposit Facility (SDF) placements increased to N4.77 trillion during the week, from N3.52 trillion previously, indicating that substantial excess liquidity remained available within the financial system.
Consequently, average system liquidity rose to a net long position of N4.26 trillion, compared with N3.95 trillion in the previous week.
Liquidity outlook
The combination of higher excess liquidity and substantial upcoming OMO maturities points to a relatively supportive liquidity backdrop for the money market in the week ahead.
Barring CBN intervention, system liquidity should remain supportive next week, supported by N2.25 trillion in OMO maturities. The maturities are expected to inject additional cash into the banking system, potentially easing funding conditions and limiting upward pressure on short-term money-market rates.
However, the extent to which that liquidity reaches the broader market will depend heavily on the Central Bank of Nigeria’s (CBN) sterilisation operations.
Additional OMO issuances could absorb part of the surplus, reducing the impact of the scheduled maturities and keeping money-market rates broadly around current levels. A more aggressive sterilisation stance, meanwhile, could tighten system liquidity and create upside risks to overnight rates.
What to watch next week
For investors and dealers, the key variables will be the size and timing of any fresh OMO issuance, the impact of the N2.25 trillion OMO maturities, and the level of banking-system liquidity.
With the system already carrying a substantial net-long liquidity position, the market could absorb some CBN sterilisation without a sharp increase in funding costs. However, if new OMO sales are sizeable enough to offset the maturities, the overnight rate could remain close to its current 22.2% level or move higher.
Overall, the week’s data point to a money market that remains liquid but increasingly sensitive to the CBN’s liquidity-management operations.
The 8bps weekly increase in the overnight rate therefore appears less reflective of a broad liquidity shortage and more of the interaction between large central-bank debits, maturities and persistent excess cash in the system.
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