Liquidity in Nigeria’s financial markets surged with average net long position rising to N2.78 trillion as of Friday, January 23, 2026, representing a 31.75% increase from N2.11 trillion recorded the previous week.
This is according to analysts at Cowry Assets Management Limited, who attributed the spike to a combination of large maturity inflows and sustained investor activity, despite aggressive liquidity management by the Central Bank of Nigeria (CBN).
They noted that the expansion occurred even as the CBN intensified efforts to rein in excess funds from the banking system.
What the analysts are saying
According to the analysts, the sharp increase in liquidity was largely driven by the repayment of about N2.2 trillion in Nigerian Treasury Bills (NTB) maturities.
This outweighed liquidity debits from N1.06 trillion in NTB auction sales conducted midweek and N1.3 trillion in Open Market Operations (OMO) bill settlements earlier in the week.
Although the CBN withdrew over N3 trillion through two separate auctions, maturity inflows proved sufficient to keep system liquidity elevated. Highlight of the numbers show:
- Average system liquidity: N2.78 trillion, up 31.75% (as of Friday, Jan. 23, 2026)
- Previous week liquidity: N2.11 trillion
- NTB maturities inflow: N2.2 trillion
- NTB auction sales debit: N1.06 trillion
- OMO bill settlements debit: N1.3 trillion
- OMO bill allotment: N2.6 trillion
- Stop rates at 19.38% for 203-day bill
- 19.39% for the 245-day bill.
Market rates spike: The tighter liquidity management translated into a spike in yields. NIBOR rose across all tenors.
- The overnight NIBOR increased by 2 basis points (bps) to 22.84% at the close of the week, while the 1-month, 3-month, and 6-month tenors also recorded increases.
- Consequently, funding conditions remained elevated, with the overnight funding rate rising by 10bps to 22.79%, while the Open Repo rate remained unchanged at 22.50%.
- NITTY yields were broadly higher across the curve, although the 1-month NITTY declined by 6bps to 16.64%. In contrast, the 3-month (16.69%), 6-month (17.88%), 9-month NITTY: (19.33%), and 12-month (21.18%) NITTY tenors trended upward.
“We anticipate selective sell-offs and elevated funding rates as investors navigate liquidity dynamics and position ahead of full-year 2025 earnings releases,” Cordros analysts projected in their report.
Treasury Bills market turns bearish as yields rise
The secondary market traded on a bearish note, with selective sell-offs pushing the average secondary market yield up by 37bps week-on-week to 18.50%.
- At the NTB primary market auction, the CBN offered N1.15 trillion, attracting total subscriptions of N3.4 trillion, highlighting strong demand.
- Nearly 98% of bids were concentrated in the 364-day tenor, underscoring investors’ preference for longer-dated instruments.
The CBN allotted about N1.1 trillion with stop rates for the 91-day and 182-day bills rising to 15.84% and 15.65%, respectively, while the 364-day bill eased marginally to 18.36%.
OMO auctions:
Earlier in the week, the CBN also conducted an OMO auction, offering N600 billion across the 203-day and 245-day tenors, which attracted N2.9 trillion in subscriptions and resulted in N2.6 trillion in allotments.
- Analysts expect liquidity to remain positive in the coming week, supported by about N900 billion in OMO maturities and anticipated FAAC inflows.
However, upcoming N900 billion FGN bond auctions on January 26, and repayments exceeding N900 billion could limit the pace of rate moderation.
- “We expect rates to trend marginally lower, supported by a positive system liquidity outlook. Liquidity conditions are expected to be bolstered by an estimated N900 billion in OMO bill maturities alongside anticipated December FAAC inflows.
- “However, these inflows may be partially offset by liquidity pressures from the planned FGN bond auction, with over N900 billion in repayments, which could temper the extent of rate moderation.
- “Consequently, while liquidity is expected to remain positive, funding rates may stay elevated relative to recent averages,” Cowry Assets stated in their report.
What you should know
System liquidity reflects the money readily available in Nigeria’s financial system, influenced by currency in circulation, bank deposits, and monetary policy tools such as Open Market Operations (OMO).
- Nigeria’s broad money supply has consistently expanded despite tightening measures by the Central Bank of Nigeria (CBN), underscoring persistent liquidity growth in the economy.
- Currency outside the banking system remains a dominant part of the monetary base, with recent money and credit data showing that a large share of cash circulates outside formal deposits, highlighting structural liquidity dynamics.
CBN uses tools like OMO and Treasury Bills to manage excess liquidity and guide interbank rates, even as money supply measures such as M3 rise due to deposit growth and economic activity.
