Nigeria’s overnight lending rate has moved higher as the banking system absorbed the impact of recent Central Bank of Nigeria treasury bills transactions, which drained cash from the financial market.

The overnight rate increased by 2 basis points to 22.20 per cent, while the open buyback rate held steady at 22 per cent.

The marginal increase in the overnight rate reflected tighter liquidity conditions following the settlement of the CBN’s midweek treasury bills auction.

Data from Herwood Securities Limited showed that system liquidity opened at a N3.66tn credit balance, representing a N930bn decline from the previous session’s N4.61tn position.

The reduction followed the settlement of government securities purchased by banks and other investors, which temporarily locked up funds that would otherwise have remained available for interbank transactions.

Liquidity conditions have also been affected by the CBN’s aggressive sterilisation programme. It sold N2.888tn in Open Market Operations (OMO) bills earlier in the week as part of its efforts to manage excess cash in the financial system.

Despite the liquidity drain, the banking system remained firmly in surplus, suggesting that financial institutions still had substantial cash buffers.

The N4.61tn liquidity level recorded earlier in the week had supported strong demand for treasury bills, as banks sought to deploy excess funds into short-term government securities.

Market expectations point to some relief in liquidity conditions as N734.81bn worth of treasury bills mature, returning funds to the banking system.

The expected inflow could help cushion the impact of recent liquidity withdrawals and prevent a sharp increase in short-term funding costs.

Consequently, market participants expect the overnight and OBB rates to remain broadly stable around current levels in the near term, provided there are no fresh large-scale liquidity withdrawals by the CBN.

The movement in money market rates underscores the growing influence of the central bank’s liquidity-management operations on short-term borrowing costs as it continues to balance monetary tightening with financial-system stability.