Money market rates remained relatively stable in April 2026, reflecting ample liquidity conditions within the financial system. Consequently, interbank rates remained well anchored and exhibited minimal volatility within the month. The favourable liquidity conditions were primarily driven by banks’ continued utilisation of the Standing Deposit Facility (SDF). Funds parked in the SDF corridor averaged N4.6trn in April, although this represented a decline from an average of N6.5trn in the previous month. In contrast, activity ramped up in the Standing Lending Facility (SLF) window, averaging N4.8bn, up from N83m in March.
- System liquidity was further bolstered by inflows from maturing instruments, including N4.9trn from OMO, while primary market repayments, mostly comprising NTB maturities, amounted to N5.3trn.
- Amid strong inflows that sustained elevated system liquidity, the CBN intensified its liquidity management operations to absorb excess surplus from the financial system.
- OMO sales activity, typically used as a channel to attract foreign portfolio inflows, totalled N6.4trn, down from N6.8trn in March.
- In contrast, primary market issuances increased to N5.3trn, up from N4.1trn raised in the previous month.
- Primarily reflecting a reduction in banks’ placements, average system liquidity moderated to N4.8trn in April, easing from N6.5trn in the previous month.
- The easing in liquidity conditions exerted mild upward pressure on interbank rates, with average money market rates closing the month at 22.15% (vs. 22% in April).
- Specifically, the overnight (OVN) rate remained unchanged at 22.0% at month end, while the Open Repo Rate (OPR) increased by 24bps month-on-month (MoM) to 22.30%.
- Furthermore, the CBN’s Nigerian Overnight Financing Rate (NOFR), introduced in April 2026, showed minimal movement, with the weighted average closing the month unchanged at 22%.
- Beyond liquidity dynamics, the CBN’s stable monetary policy stance has also supported the stabilisation of money market rates.
- Looking ahead, despite the CBN’s ongoing liquidity mop-up operations, Quest MB’s analysts expect system liquidity to remain robust, supported by sustained bank placements at the SDF and sizeable inflows from maturing instruments.
- In addition, Quest MB’s analysts anticipate a stable monetary policy stance due to inflationary pressures. This cautious posture would potentially limit volatility in short-term funding rates (see chart below)
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