Nigerian Banks Boost Market Liquidity as Overnight Rate Slips to 32.9%

Liquidity conditions in Nigeria’s money market strengthened last week as total system liquidity rose by 62.3% to ₦2.2 trillion.

According to a market update by Afrinvest, the surge in market liquidity was driven by a 76.4% week-on-week increase in banks’ access to funding.

Despite the improved liquidity, short-term interest rates remained relatively elevated, with the open repo (OPR) rate steady at 32.4% while the overnight (OVN) rate eased slightly by 10 basis points to close at 32.9%.

The marginal drop in the overnight rate indicates a mild loosening in interbank borrowing costs, although rates continue to reflect the Central Bank of Nigeria’s tight monetary stance aimed at curbing inflation and supporting the naira.

Analysts noted that while market liquidity is expanding, it has yet to translate into significant repricing of short-term instruments, suggesting caution remains high across the money market.

Liquidity is expected to rise further in the coming week, bolstered by a treasury bill maturity of ₦1.2 trillion, which may provide room for further moderation in funding rates.