CBN Liquidity Mop-Up Keeps Funding Conditions Tight        

• As investors position for N700bn T- bills primary market suction

The Nigerian money market opened last week on a strong liquidity footing, with banking system liquidity recording a net surplus balance of N7.0 trillion, supported by N102.7 billion in inflows from primary market repayments.

However, the Central Bank of Nigeria (CBN) sustained its aggressive liquidity sterilisation strategy through an Open Market Operations (OMO) auction, where it mopped up approximately N1.4 trillion from the financial system.

Consequently, system liquidity moderated significantly to close the week at N2.87 trillion, reflecting the apex bank’s continued commitment to containing excess liquidity and supporting its broader monetary policy objectives.

The tighter liquidity environment was reflected in mixed movements across key money market rates.

The overnight Nigerian Interbank Offered Rate (NIBOR) edged higher by 2 basis points (bps) week-onweek to 22.30%, indicating marginally tighter short-term funding conditions.

In contrast, the 1-month, 3-month, and 6-month NIBOR declined by 15bps, 25bps, and 48bps, respectively, suggesting improved liquidity expectations over the medium term Similarly, the Overnight (OVN) rate eased by 5bps to 22.18%, while the Open Repo Rate (OPR) remained unchanged during the week.

Across the Nigerian Treasury Bills True Yield (NITTY) curve, yields were largely lower, with the 1-month, 3-month, and 12-month tenors declining by 7bps, 6bps, and 4bps, respectively. The exception was the 6-month NITTY, which rose by 39bps on the back of stronger investor demand at the mid-segment of the yield curve.

Activity in the secondary Treasury bills market remained relatively subdued, as sell side pressure across the short- and medium-term maturities pushed the average Treasury bills yield 6bps higher to 18.65%.

Meanwhile, the CBN’s OMO auction attracted robust investor demand, with subscriptions reaching N1.6 trillion against an offer of N600 billion across the 7-day and 161- day tenors.