Excess liquidity in the banking system surged by 37 percent to reach ₦8.84 trillion, up from ₦6.45 trillion.
This robust funding profile, highlighting a surplus more than double the start-of-year level of ₦3.82 trillion, was driven by OMO repayments and additional money market inflows.
To rein in the surplus liquidity, the apex bank floated ₦2.5 trillion in OMO bills across three tenors on Tuesday, eventually raising about ₦5 trillion, with market analysts noting total sales reached ₦4.69 trillion.
Despite this immense liquidity cushion, short-term benchmark interest rates experienced mild upward pressure. The overnight lending rate rose by 0.28 percentage points to settle at 20.86 percent, while the overnight policy rate remained steady at 20.50 percent.
Furthermore, the Nigerian Overnight Financing Rate held firm at the 20 percent floor of the corridor established following the recent monetary policy rate cut to 23 percent, and the average Treasury bill rate remained unchanged at 17.84 percent according to AIICO Capital Limited.
Financial experts project that overnight rates will likely hover near the 20 percent floor as long as systemic liquidity stays above the ₦8 trillion threshold, pending the full impact of Tuesday’s OMO settlement in draining excess cash from the system.