Banks’ deposits with the Central Bank of Nigeria (CBN) rose to N8.311 trillion on November 6, despite the apex bank absorbing N724.32 billion through an Open Market Operations (OMO) auction.
The latest figure, based on CBN data analysed by Nairametrics, highlights the persistent surplus liquidity in the banking system despite the regulator’s efforts to drain excess cash.
Funds placed by banks under the CBN’s Standing Deposit Facility (SDF) increased by N347.44 billion, or 4.36 per cent, from N7.964 trillion on November 5. It was also N1.345 trillion, or 19.3 per cent, higher than the N6.966 trillion recorded on November 4. Nairametrics
The increase occurred on the same day the CBN conducted an OMO auction and raised N724.32 billion from the sale of securities.
The apex bank had offered N1 trillion through 179-day and 270-day OMO bills but received subscriptions worth N1.887 trillion, representing 188.72 per cent of the amount offered.
However, it allotted only N724.32 billion, leaving N1.163 trillion of the bids unallocated.
The 179-day instrument attracted N741.62 billion in bids, with N405.62 billion allotted at a stop rate of 17.25 per cent. The 270-day bill received N1.146 trillion in subscriptions, but only N318.70 billion was allotted at a stop rate of 16.54 per cent.
The latest intervention was significantly smaller than the approximately N2.95 trillion allotted by the CBN during its November 3 OMO auction.
Liquidity continues to build
The rising SDF balance came alongside a sharp decline in banks’ opening balances, suggesting that more funds were being moved into the CBN’s deposit facility.
Opening balances fell from N612.06 billion on November 4 to N258.83 billion on November 5 and further to N194.10 billion on November 6.
Overall, opening balances declined by N417.96 billion, or 68.29 per cent, within the three-day period.
The liquidity build-up is also being supported by fresh inflows into the financial system. The Financial Markets Dealers Association (FMDA) projects about N13.79 trillion in November inflows, mainly from OMO maturities, FAAC allocations and Treasury Bills repayments.
Meanwhile, banking-system liquidity rose 56.75 per cent to N7.373 trillion in October from N4.703 trillion in September.
The continued accumulation of funds at the CBN is likely to keep liquidity management high on the monetary authority’s agenda, particularly as it balances efforts to contain excess cash with the need to maintain orderly money-market conditions.
Source: CBN data as analysed by Nairametrics.
