The Central Bank of Nigeria, CBN, says liquidity in the banking system fell by N930 billion to N3.66 trillion following the settlement of its Treasury Bills auction.
The latest money-market data published by the apex bank on Friday showed that system liquidity declined from N4.59 trillion previously recorded, while the overnight lending rate rose marginally to 22.20 per cent from 22.18 per cent. The Open Buy Back rate remained unchanged at 22.00 per cent.
The latest liquidity position is significantly lower than the N6.81 trillion surplus recorded on Aug. 11, following a N2.48 trillion inflow from matured Open Market Operations, OMO, securities.
The apex bank has continued to use OMO and Treasury Bills operations to manage liquidity in the financial system.
At its Aug. 26 OMO auction, the CBN received N4.26 trillion in subscriptions against N1 trillion offered and allotted N2.80 trillion.
The apex bank also recorded strong demand at its Treasury Bills auction on the same day, receiving N3.79 trillion in subscriptions against N700 billion offered and allotting N762.89 billion.
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The liquidity decline comes amid intensified CBN activity in the OMO market, with the apex bank withdrawing a combined N4.72 trillion through four OMO auctions conducted on Aug. 26 and 27.
Investor demand remained strong, with subscriptions reaching N8.62 trillion, more than four times the N2 trillion initially offered, indicating sustained appetite for short-term naira-denominated securities.
In August, the CBN revised its framework for OMO participation and access to the Discount Window, allowing all eligible investors to participate in both the primary and secondary OMO markets through Deposit Money Banks.
Under the revised framework, individuals, corporates and non-bank financial institutions became eligible to participate in OMO transactions through their banks.
The apex bank also lifted the suspension on Tenored Repo Operations, allowing repurchase transactions with maturities ranging from four to 90 days as part of measures to improve money-market functioning and liquidity management.
Despite the latest decline, the financial system remains in surplus, with liquidity standing at N3.66 trillion at the opening of Friday’s market.
NAN
