Nigeria’s inter-bank liquidity declines by 57.69% on low maturities

Nigeria’s interbank market has witnessed liquidity strain in the last three days, declining by 57.69 percent from N78 billion on Monday to N33 billion on Tuesday, financial market dealers said.

The decline was due to low inflows from maturities. Ayodeji Ebo, managing director/CBO, Optimus by Afrinvest, said there are not many bill maturities this quarter and this impacts the liquidity system.

In the Nigerian Treasury Bills issuance programme calendar, the Central Bank of Nigeria (CBN) plans to issue a total of N1.2 trillion treasury bills in the third quarter of 2022 as the same amount will be maturing between June 2022 and August this year.

The overnight policy rate (OPR), the rate at which banks lend and borrow from each other and the Open Buy Back (OBB), a money market instrument used to raise short-term capital, remained elevated on Tuesday, amid interbank liquidity depressing further to a N33bn Repurchase agreement (Repo).

As of June 21, the Overnight (O/N) rate remained unchanged at 14.00 percent, while the Open Repo (OPR) increased by 0.08 percent to close at 13.83 percent as against the last close of 13.75 percent, a report by FSDH noted.

“We expect rates to increase and remain elevated this week, as the bond auction debit further strains liquidity,” analysts at Parthian Partners, Africa’s premier inter-dealer broker said.

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The breakdown of the T-bills programme to be issued in the next three months, which also represents the amount that would mature during the same period, consists of a total of N33.4 billion for 91-day tenor, N21.9 billion for 182-day tenor and N1.17 trillion for 364-day tenors.

The CBN issues Treasury Bills twice in a month to help the Federal Government fund its budget deficit, support banks in managing liquidity in the system and curb inflation.

Nigerian Treasury Bills (NTB) as defined by the CBN are short-term securities issued at a discount for a tenor ranging from 91 to 364 days, such that the income received is the difference between the purchase price and the amount received at maturity or prior to the sale.

In January this year, Open Market Operations (OMO), repos and fiscal disbursements to the three tiers of government influenced banking system liquidity, according to the CBN’s economic report for January 2022.

Consequently, average banking system liquidity increased significantly by 59.0 per cent to N178.52 billion at the end of January 2022, from N112.26 billion in the preceding month. The liquidity level in the review period was influenced by repayment of matured CBN bills of N367.00 billion, repos totalling N968.79 billion and fiscal disbursements to the three tiers of Government, amounting to N766.47 billion. The total injection was higher than the withdrawal of N130.00 billion in the sales of CBN bills.

At the foreign exchange market, Naira appreciated by 0.25 percent as the dollar was quoted at N420.28 on Tuesday as against the last close of N421.33 on Monday at the Investors and Exporters (I&E) forex window. Most currency dealers who participated in the foreign exchange auction on Tuesday maintained bids between N413.00 and N444.00 per dollar.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.