Liquidity pressures intensified in Nigeria’s interbank market last week as commercial banks continued to channel surplus funds to the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF), reflecting tepid credit appetite and cautious positioning ahead of possible monetary tightening.
System liquidity opened the week with a net surplus of N2 trillion, a sharp decline from the N3.4 trillion recorded the previous week. The fall was partly cushioned by N300 billion in Open Market Operation (OMO) maturities, which helped to stabilise short-term funding levels temporarily.
By the end of the week, however, liquidity had further declined to N1.62 trillion, as the CBN intensified liquidity sterilisation efforts through primary market repayments.
In a market note to investors, Cowry Research observed that the persistent placement of excess cash at the SDF window “underscores weak risk appetite among banks, even as short-term funding rates continue to tighten.”
The report added:
“This reflects a combination of cautious credit expansion and strategic liquidity management amid an aggressive policy stance by the monetary authority.”
The CBN has maintained a tight monetary stance in recent months in its bid to tame inflationary pressures and stabilise the naira, a move that has continued to shape liquidity dynamics and interbank market behavior.
