Recent reports indicate that banks' placements at the Central Bank of Nigeria's Standing Deposit Facility (SDF) surged by 60% to ₦4.15 trillion, according to data from MarketForces Africa. This significant increase reflects a robust liquidity condition within the financial system, which has contributed to a stabilization of funding rates.

Analysts noted that while interbank short-term borrowing has declined, there was still some activity reported in the Standing Lending Facility (SLF) as smaller banks sought to address funding gaps. Investment firm Cowry Asset Limited highlighted that the market remains flush with liquidity, bolstered by substantial inflows from maturing Open Market Operation (OMO) bills, totaling ₦2.21 trillion.

Additionally, financial liquidity was supported by the maturity of Treasury bills, which amounted to ₦269.36 billion. The Debt Management Office, acting on behalf of the Central Bank, conducted a midweek auction, selling treasury papers worth ₦1.06 trillion to investors across various tenors. As a result, system liquidity moderated slightly, closing at ₦4.32 trillion by the end of the week.

During the week, banks’ deposits at the CBN SDF window surged by nearly 60%, rising from ₦2.60 trillion the previous week. Investment firms reported marginal borrowing through the SLF, totaling ₦36.10 billion, indicating limited funding pressures within the banking system.

Reflecting the improved liquidity environment, interbank funding rates have eased across the curve. The Nigerian Interbank Borrowing Rate (NIBOR) decreased by 10 basis points to 22.19%, suggesting reduced demand for short-term funding among banks. Looking ahead, Cowry Asset Limited anticipates that liquidity conditions will remain supportive, with approximately ₦900 billion in OMO maturities expected to flow into the banking system in the upcoming week.

However, the firm cautioned that the Central Bank of Nigeria may continue to monitor and adjust its policies to maintain this liquidity balance.