System liquidity in the Nigerian money market tightened sharply during the week ended 11tn September, following heavy CBN sterilisation through OMO sales and other auction settlements.
Liquidity opened at N4.32tn on Monday before falling to N2.95tn on Tuesday, a 32% decline, following the settlement of N4.4tn in OMO sales, which more than offset N3.1tn in maturities.
Without the sterilisation, system liquidity could have risen to around N7.45tn, underscoring the significant impact of the CBN’s liquidity management operations.
Liquidity recovered marginally to N3.16tn on Wednesday before easing further to N2.88tn on Thursday following the settlement of the N500bn NTB auction and related maturity flows.
By Friday, system liquidity stood at N2.46tn, down from N4.66tn a week earlier, representing a weekly contraction of 47.1%.
Despite the tighter liquidity position, overnight funding conditions remained broadly stable. The Overnight rate edged down by 4bps w/w to 22.21%, while the OPR remained unchanged at 22.00%.
Across the NIBOR curve, one-month rates increased marginally by 1bp to 22.70%, while three- and six-month rates declined by 10bps and 16bps to 23.29% and 23.66%, respectively.
The NITTY curve also closed the week slightly lower, with the 12-month yield recording the largest contraction of 29bps to 19.70%.
The 3-month and 6-month yields declined by 16bps and 3bps, respectively, while the 1-month yield was broadly unchanged at 16.56%.
The secondary Treasury bills market maintained a bullish tone during the week, with marginal yield contractions recorded across the short, medium, and long ends of the curve. Consequently, the average market yield declined by 1bp w/w to 18.85% from 18.86%.
At last Wednesday’s NTB auction, the DMO offered N750bn across the standard maturities and attracted strong investor demand, with total subscriptions reaching N2.6tn.
The DMO ultimately allotted N1.1tn. Stop rates on the 91-day and 182-day bills remained unchanged at 16.30% and 16.50%, respectively, while the 364-day bill recorded a sharper 22bps decline to 16.52%.
The CBN continued its aggressive liquidity management stance at the OMO auction, offering N1.0tn across the 84-day, 147-day, and 154-day maturities. Investor demand remained exceptionally strong, with total subscriptions reaching N6.3tn, more than six times the amount initially offered.
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