Liquidity pressures deepened 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 fresh monetary tightening.
This is coming after system liquidity opened the week with a net surplus of N2 trillion, down sharply from the N3.4 trillion recorded in the previous week. The decline was partly cushioned by N300 billion in Open Market Operation (OMO) maturities, which provided some stability to interbank funding levels.
By week’s close, however, liquidity had further thinned to N1.62 trillion as the apex bank intensified its liquidity sterilisation efforts through primary market repayments.
“The persistent placement of excess cash at the CBN’s SDF window underscores weak risk appetite among banks, even as short-term funding rates continue to tighten,” Cowry Research said in a note to investors.
He 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 its tight monetary posture in recent months to curb inflationary pressures and support the naira.
