Overnight lending rate declines by 18 basis points despite N5.72tn OMO debits, while expected maturities could support liquidity in the coming week.
Liquidity conditions in the Nigerian money market moderated during the week, with the overnight (OVN) lending rate declining by 18 basis points week-on-week to 20.2 per cent, despite significant liquidity withdrawals through Open Market Operations (OMO).
The movement in the overnight rate occurred as OMO primary market auction debits of N5.72 trillion outweighed inflows from OMO maturities amounting to N2.02 trillion.
Consequently, average system liquidity declined to a net long position of N7.20 trillion from N8.05 trillion recorded in the preceding week, reflecting the impact of the Central Bank of Nigeria’s liquidity mop-up operations.
Despite the reduction, the banking system maintained substantial excess liquidity, providing support for relatively stable short-term funding conditions.
Looking ahead, system liquidity is expected to remain elevated in the coming week, supported by anticipated OMO maturities of approximately N2.30 trillion.
However, additional liquidity management operations by the CBN could moderate the expected surplus and influence movements in short-term money market rates.
