Nigeria’s banking system is set to receive N2.56 trillion in liquidity this week, down sharply from N5.40 trillion last week, as the Central Bank of Nigeria (CBN) maintains its tight grip on money supply despite improving macroeconomic conditions.
An analysis of the latest Financial Markets Dealers Association (FMDA) Weekly Market report shows the expected inflows represent a 52.5 percent week-on-week decline, underscoring the apex bank’s determination to keep excess cash out of the financial system as it battles inflation and supports exchange rate stability.
The moderation in liquidity follows a week in which the financial system absorbed multiple liquidity-draining activities, including Cash Reserve Ratio (CRR) debits by the CBN, a private Open Market Operations (OMO) auction, and the federal government’s bond auction, where the Debt Management Office (DMO) raised N929.32 billion from investors.
Although liquidity is expected to tighten further, market indicators suggest investors remain optimistic about Nigeria’s financial outlook, buoyed by record-high external reserves, declining sovereign bond yields, and sustained demand for government securities.
The CBN, however, appears to be offsetting much of the incoming liquidity.
