Money Market Liquidity Soars to ₦6.12tn as CBN Rejects ₦5tn OMO Bids

Liquidity in Nigeria’s financial system surged to ₦6.12 trillion on Tuesday after the Central Bank of Nigeria (CBN) rejected roughly ₦5 trillion worth of bids for its Open Market Operation (OMO) bills auction.

System liquidity closed at a net long position of ₦6.12 trillion, bolstered by an OMO repayment of ₦2.14 trillion and increased placements by deposit money banks. Banks’ placements at the CBN’s Standing Deposit Facility (SDF) rose to ₦3.92 trillion, while some institutions with liquidity shortfalls borrowed ₦14.30 billion from the Standing Lending Facility (SLF) window.

As a result, key funding rates, including the overnight lending rate and the Open Repo Rate (OPR), remained steady at 22.79% and 22.50%, respectively, according to FMDQ data.

Secondary market activity showed bullish trends in Nigerian Treasury bills, with rising investor interest in naira assets driving the average benchmark yield down marginally by 1 basis point to 18.45%. Similarly, yields on OMO bills declined slightly to close at 22.15%.

Analysts expect system liquidity to remain elevated despite the forthcoming debit from the latest Federal Government of Nigeria (FGN) bond auction and the next OMO auction. The financial system is projected to experience a temporary liquidity reduction following the settlement of ₦1.54 trillion for the January 26 bond auction.

The CBN had offered an OMO bill auction totalling ₦600 billion across two standard tenors to absorb excess liquidity. Despite strong investor interest, with subscriptions reaching ₦4.9 trillion, no allotment was made.