Nigeria’s money market came under less funding pressure last week as excess liquidity in the banking system climbed to N4.66tn, pushing the overnight lending rate lower.
System liquidity increased from N3.6tn in the previous week, supported largely by banks’ placements at the Central Bank of Nigeria’s Standing Deposit Facility and inflows from maturing securities.
According to Cowry Asset Limited, about N4.4tn of the surplus was placed at the SDF, while N2.3tn in primary market repayments further boosted liquidity available to financial institutions.
The liquidity build-up helped ease short-term funding costs, with the overnight rate declining by 13 basis points to 22.13 per cent. The funding rate, however, remained unchanged at 22 per cent.
The softer money market conditions came despite continued liquidity management by the CBN through Open Market Operations, with OMO settlements absorbing some of the excess cash from the financial system.
