Nigeria’s interbank funding rates held steady at around 22% on August 20, 2026, according to market data, with overnight lending rates unchanged at 22.2%. This stability occurred as system liquidity rose to approximately ₦4.93 trillion, boosted by a ₦2.22 trillion Open Market Operation repayment, officials said.
The Open Buyback (OBB) and Nigerian Overnight Financing Rate (NOFR) held firm at 22%, while the overnight lending rate was unchanged at 22.2%, reflecting stable funding costs despite fluctuations in system liquidity, sources confirmed. Earlier in August, overnight rates hovered between 22.1% and 22.3%, with daily marginal movements of 1 to 15 basis points that did not significantly affect overall monetary conditions, according to reports from investment firms and FMDQ data.
Short-term interbank funding rates in Nigeria remained steady at about 22% on August 20, 2026, closely aligned with the Central Bank of Nigeria’s (CBN) policy stance, according to market data and officials.
The banking system’s liquidity position rose sharply to approximately ₦4.93 trillion on August 19, 2026, up from about ₦3.38 trillion the previous session, supported by a ₦2.22 trillion Open Market Operation (OMO) repayment, market commentary showed. This surge pushed overall liquidity near ₦5 trillion, with system balances frequently reported between ₦4 trillion and ₦7 trillion in recent weeks, indicating a persistent surplus in the banking sector, analysts said. A weekly review covering mid-August indicated average system liquidity at ₦4.64 trillion, up from ₦3.53 trillion the prior week, despite sizeable debits from CBN operations, demonstrating continued excess liquidity conditions.
Central Bank liquidity management operations, including OMO repayments and debits, have been key in underpinning the stability of interbank rates. On August 11, 2026, a ₦2.48 trillion OMO repayment was identified as the largest liquidity injection of the week, contributing to a net liquidity injection of ₦5.21 trillion between August 4 and 11, according to market reports citing CBN data. Concurrently, the CBN raised about ₦2.52 trillion through a 141-day OMO bill and an additional ₦2.17 trillion via 112-day and 113-day instruments within 48 hours in early August, mopping up a combined ₦4.69 trillion from system liquidity. Despite these mop-ups, liquidity remained robust, with average system liquidity settling at ₦4.64 trillion and overnight rates steady around 22.3%, sources confirmed.
The CBN’s Standing Deposit Facility (SDF) has absorbed significant excess liquidity, with daily bank placements running into multiple trillions of naira. On one trading day in August, bank placements at the SDF reached ₦4.09 trillion, lifting the facility’s balance to ₦4.35 trillion, according to market data. Another session saw SDF placements increase by 66.52% to ₦4.62 trillion, coinciding with a rise in system liquidity to ₦5.05 trillion, alongside coupon inflows. When no OMO auction occurred, deposit money banks increased placements at the SDF from ₦4.11 trillion to ₦6.14 trillion, even as system liquidity moderated slightly from ₦6.81 trillion to ₦6.47 trillion, market reports indicated. This pattern of large SDF usage suggests banks hold substantial excess reserves, preferring to place idle cash risk-free with the CBN, which helps maintain low funding pressure and steady overnight rates near 22%.
Funding costs remained stable despite swings in liquidity levels. Market commentary noted that excess liquidity kept funding costs around 22%, even when system liquidity declined from ₦4.93 trillion to ₦4.01 trillion due to Federal Government debt settlements. On August 19, despite the jump in liquidity to about ₦4.93 trillion, the overnight rate moved only 1 basis point to 22.20%, while the open repo rate held at 22.00%, showing minimal sensitivity of rates to liquidity surges. FMDQ data for a separate session showed the open buyback rate unchanged at 22%, while the overnight lending rate eased by just 1 basis point to 22.09%, attributed by analysts to abundant liquidity rather than shifts in broader monetary conditions. Another report indicated average money market funding rates eased slightly, with the overnight rate declining 6 basis points to 22.19%, while the Overnight Policy Rate (OPR) remained at 22.00%, despite liquidity ranging from ₦4.08 trillion to ₦6.47 trillion over the week.
A longer-term analysis of overnight financing activity between April 13 and July 31, 2026, found the benchmark overnight rate remained “remarkably stable” at around 22%, even as transaction volumes expanded sharply to ₦104.9 trillion in July, according to a financial market study. This stability amid significant liquidity and volume changes underscores the effectiveness of CBN’s monetary operations.
For the year ending July 2026, cumulative OMO sterilisation operations by the CBN surpassed ₦50 trillion, with an additional ₦21.14 trillion withdrawn during June and July, placing current August liquidity levels in the context of sustained large-scale tightening efforts, analysts noted. A snapshot from July showed system liquidity falling from ₦4.63 trillion to ₦3.78 trillion following CBN Cash Reserve Ratio debits, OMO auctions, and Federal Government bond sales, illustrating the multiple policy tools compressing liquidity. Despite these mop-ups, August trading sessions continued to report net long positions above ₦4 trillion, suggesting that inflows from OMO maturities, coupon payments, and other factors have restored surplus liquidity, sources said. Weekly market summaries also indicated treasury bill yields rose about 16 basis points even as system surplus swelled and overnight rates stayed firm, reflecting the impact of CBN liquidity operations on the broader yield curve without destabilising interbank funding rates.
This pattern from July into August reflects a cycle in which the CBN withdraws liquidity via Cash Reserve Ratio and OMO instruments, then injects funds through maturities and repayments, resulting in a high-frequency surplus-mop-up-surplus pattern with interbank rates anchored near the policy corridor throughout, according to market analysts.
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