CBN slows liquidity mop-up as banks brace for ₦13.79tn November inflows
- The CBN sold ₦6.182tn in OMO bills in October against ₦9.051tn maturities, leaving about ₦2.87tn in the banking system.
- Banking-system liquidity rose 56.75% to ₦7.373tn in October from ₦4.703tn in September, according to FMDA data.
- FMDA projects ₦13.79tn of inflows in November, with OMO maturities making up about 64.75% of the total.
Nigerian banks are heading into November with more cash on hand after the Central Bank of Nigeria (CBN) slowed how much money it pulled out of the financial system in October.
Data from the Financial Markets Dealers Association (FMDA) shows the CBN sold ₦6.182tn in new Open Market Operations (OMO) bills in October, while ₦9.051tn in maturing bills were repaid. That left a net repayment of about ₦2.87tn in the system before other movements.
It marks a sharp turn from September, when the CBN sold ₦17.51tn in OMO securities against ₦10.89tn in maturities, pulling out a net ₦6.62tn.
The effect showed up in bank balances. Banking-system liquidity rose 56.75 per cent to ₦7.373tn in October from ₦4.703tn in September, according to the FMDA's October market report.
The shift was clearest towards the end of October, when the CBN cut back its allotments at its final OMO auction. Treasury Bills auctions also saw large portions of investor bids left unfilled.
What it means for borrowers and savers
More cash in the banking system can push down short-term interest rates, which affects what banks earn on government securities and, eventually, the cost of borrowing for businesses and households.
But the FMDA warns the extra money is not guaranteed to stay. The CBN could soak up part of it through fresh OMO sales, and the final impact will depend on how much new debt the government issues and how much banks choose to reinvest.
Interbank rates held fairly steady in October. The Nigeria Overnight Financing Rate closed unchanged at 20.00 per cent, while the overnight rate dipped five basis points to 20.38 per cent. The Monetary Policy Rate stayed at 23.00 per cent after the CBN's September cut of 350 basis points.
The FMDA advised banks to keep adequate liquidity buffers, noting the CBN still relies on OMO auctions to manage excess funds.
November outlook
The FMDA projects about ₦13.79tn in inflows for November, up 2.16 per cent from ₦13.495tn in October. OMO maturities account for the biggest share at ₦8.927tn, or roughly 64.75 per cent.
Federation Account Allocation Committee (FAAC) allocations are put at ₦2.50tn, Treasury Bills maturities at ₦1.919tn, Federal Government bond coupons at ₦323.154bn, corporate bond coupons at ₦68.032bn and commercial paper maturities at ₦50.016bn.
Treasury Bills maturities are set to rise the most, up 46.49 per cent or about ₦609bn from October. OMO maturities are expected to fall 1.37 per cent, while Federal Government bond coupon payments drop 49.08 per cent.
A $105.94m Eurobond coupon payment is also due in November but is not counted in the naira projection.
The Monetary Policy Committee meets this month, and its decisions will shape how much of the expected cash the CBN decides to mop up.