Liquidity in Nigeria’s banking system climbed sharply to N8.84tn ahead of the settlement of the Central Bank of Nigeria’s latest Open Market Operation bills, raising expectations of a substantial cash withdrawal from the financial system.
The latest liquidity position represents a 37.01 per cent increase from N6.45tn, according to market data from AIICO Capital Limited.
The surge has pushed excess liquidity to more than twice the N3.82tn recorded at the beginning of the year, reflecting the combined impact of OMO maturities and other inflows into the money market.
The buildup occurred despite renewed efforts by the CBN to absorb surplus cash through the sale of government securities.
The apex bank offered N2.5tn in OMO bills across three maturities on Tuesday, with strong investor demand reportedly taking the eventual amount raised to about N5tn.
The transactions are expected to reverse part of the liquidity buildup once the securities are settled, with market participants closely monitoring the impact on short-term funding rates.
Despite the abundant liquidity, overnight borrowing costs recorded a modest increase.
