Nigeria’s overnight lending rate has risen slightly as tighter liquidity conditions followed recent Central Bank of Nigeria treasury bills transactions.
The overnight rate increased by two basis points to 22.20 per cent, while the Open Buyback rate remained unchanged at 22 per cent.
The movement came after the settlement of the CBN’s midweek treasury bills auction, which reduced the amount of cash available for interbank transactions. Data from Herwood Securities Limited showed that system liquidity opened at N3.66tn, down by N930bn from the previous session’s N4.61tn.
The decline reflected funds committed by banks and other investors to government securities. The liquidity situation was also influenced by the CBN’s sterilisation efforts, including the sale of N2.888tn worth of Open Market Operations bills during the week.
Despite the withdrawals, the banking system remained in surplus, indicating that financial institutions still had considerable cash buffers.
Market participants are, however, expecting liquidity conditions to improve as N734.81bn worth of treasury bills mature and return funds to the banking system.
The expected inflows could help ease pressure on short-term borrowing costs, with market expectations pointing to relatively stable overnight and OBB rates in the near term, provided the CBN does not carry out another major liquidity withdrawal.
The latest movement highlights the growing impact of the central bank’s monetary operations on short-term funding costs as it continues to manage liquidity and maintain financial system stability.
