Nigeria’s money market closed the month under sustained liquidity pressure, despite a modest improvement in system balances, as the Central Bank of Nigeria’s aggressive monetary tightening continued to drain cash from the financial system.
Average system liquidity in the month of January settled at a net negative of N2.4 trillion, improving slightly from the previous month’s -N2.9 trillion.
Overall, the CBN withdrew more than N15 trillion from the financial system during the month through aggressive liquidity management operations, although the net tightening was significantly lower.
The gross mop-up comprised N8.5 trillion in Open Market Operations sales, N2.9 trillion placed by banks at the Standing Deposit Facility and N3.7 trillion raised through primary market issuances.
These outflows were partly offset by inflows of about N8.4 trillion from OMO maturities, primary market repayments and Standing Lending Facility usage, leaving system liquidity in a sustained deficit and keeping interbank funding conditions tight.
The marginal recovery, however, masked the scale of outflows recorded during the period, driven largely by Standing Deposit Facility placements of N2.9 trillion, OMO sales totalling N8.5 trillion and primary market sales of N3.7 trillion.
