Nigeria’s banking system liquidity held above N8 trillion despite a N2.36 trillion Open Market Operations (OMO) mop-up by the Central Bank of Nigeria (CBN), highlighting the persistence of excess funds in the financial system.
This is according to mid-week financial data from the apex bank following its OMO auction conducted on March 23, 2026.
The development underscores the scale of liquidity inflows and the limited immediate impact of the CBN’s aggressive intervention on overall market conditions.
What the data is saying
The CBN’s N2.36 trillion OMO issuance was aimed at aggressively sterilising system liquidity, which opened the week at over N8.06 trillion. Opening balances on March 23 stood at N85.04 billion, reflecting an initial liquidity squeeze immediately after the mop-up.
- The CBN’s N2.36 trillion OMO issuance was probably intended to aggressively sterilise system liquidity, which opened the week at over N8.06 trillion.
- Opening balances on March 23 stood at a modest N85.04 billion, reflecting immediate liquidity strain following the OMO mop-up.
- Yet, this tightening proved short-lived as broader system liquidity surged to N7.98 trillion at the SDF window on Wednesday, March 25, 2026.
- The scale of the OMO intervention typically aims to pull down liquidity, push up yields, and curb speculative pressures in the foreign exchange market.
However, despite the scale of the intervention, liquidity rebounded quickly, signalling strong underlying inflows into the system.
More insights
A key factor sustaining elevated liquidity levels is the heavy use of the Standing Deposit Facility (SDF), where banks park excess funds with the CBN.
Data shows that SDF balances settled at N8.17 trillion at the start of the week on March 23.
- SDF deposits declined slightly to N6.59 trillion on March 24 before rising again to N7.97 trillion by March 25.
- The consistent rise in SDF balances reflects banks’ preference for risk-free returns at the CBN window.
- Persistent high deposits indicate that excess liquidity remains significant despite OMO interventions.
- Analysts note that this trend suggests the need for more frequent and large-scale liquidity mop-ups.
This pattern highlights that the CBN’s current liquidity management tools may require sustained application to achieve desired monetary outcomes.
What you should know
Nigeria’s banking system has recorded a sustained surge in excess liquidity in recent weeks, with balances at the CBN deposit window rising above N8 trillion.
This reflects a build-up of idle funds driven largely by inflows from maturing securities and limited absorption through OMO auctions.
- Banks have increasingly channelled surplus funds into the SDF due to its attractive risk-free overnight interest rate of about 22.28%.
- The liquidity surge has been supported by maturing instruments, including N1.44 trillion and N579.003 billion in securities.
- Elevated liquidity conditions pose risks to interest rate stability and could fuel inflationary pressures.
- Analysts warn that excess liquidity may also drive speculative activities in the foreign exchange market.
The persistence of this liquidity glut suggests structural imbalances within the financial system and reinforces expectations that the CBN will continue to rely on aggressive OMO operations to stabilise market conditions in the near term.
