Nigeria’s financial system is projected to receive a liquidity injection of about N3.12 trillion this week, driven largely by the maturity of Open Market Operations (OMO) bills, according to the latest weekly market report by the Financial Markets Dealers Association (FMDA).
The report showed that total expected inflows into the financial system would increase by 24.8 per cent, rising from N2.50 trillion recorded in the previous week to N3.12 trillion.
According to the FMDA, OMO maturities will account for the bulk of the expected liquidity, increasing to N2.97 trillion from N2.21 trillion in the preceding week, underscoring the Central Bank of Nigeria‘s continued use of the instrument in managing liquidity conditions.
In addition to the OMO inflows, the market is expected to receive N10.56 billion from Federal Government bond maturities after no such maturities were recorded in the previous week. Corporate bond coupon payments are also projected to rise significantly to N47.27 billion, compared with N1.75 billion in the preceding week.
The anticipated liquidity boost comes after tighter conditions in the money market last week, when the Central Bank’s liquidity management operations and lower maturing securities constrained system liquidity.
Market analysts believe the improved liquidity could ease funding pressures across the banking sector, although the extent of the impact will depend on the Central Bank’s open market operations and other liquidity-absorbing measures during the week.
The report also indicated that developments in the fixed-income market would remain closely tied to liquidity conditions, with investors expected to monitor the apex bank’s actions as well as demand patterns for government securities.
The projection comes as the Debt Management Office (DMO) has reopened three Federal Government bonds with a target of raising N1.2 trillion at its July bond auction, an exercise that could also influence liquidity and yields in the domestic debt market.
