Liquidity inflows into Nigeria’s financial system are expected to decline by more than half this week as the absence of Treasury bills (T-bills) maturities and Federation Account Allocation Committee (FAAC) disbursements compounds the impact of the Central Bank of Nigeria’s (CBN) liquidity tightening measures, according to the Financial Markets Dealers Association (FMDA).
The FMDA said estimated inflows into the financial system will fall to N2.562 trillion this week from N5.395 trillion in the previous week, representing a 52.5 percent decline.
The expected reduction follows a weakening in banking system liquidity last week, with average system liquidity declining by 18.41 percent to N3.78 trillion from N4.63 trillion. According to the FMDA, the decline largely reflected the impact of the CBN’s Cash Reserve Ratio (CRR) debits, a private Open Market Operation (OMO) auction and the Federal Government bond auction through which the Debt Management Office (DMO) allotted N929.32 billion.
The sharp drop in expected inflows is primarily due to the absence of N1.51 trillion in Treasury bills maturities and N1.50 trillion in FAAC allocations received in the previous week. There are also no corporate bond maturities scheduled this week, compared with N30 billion that matured last week.
