Bank liquidity jumps 17.16% to N5.53 trillion as CBN mops up excess cash
By Aboki Forex —
Nigeria's banking system liquidity rose 17.16% to N5.53 trillion in May 2026, up from N4.72 trillion in April, according to the Central Bank of Nigeria's Monthly Economic Report for May 2026.
The increase came even as households and businesses continued to grapple with rising living costs.
What pushed the inflows
The CBN said the surge was largely driven by inflows from matured CBN bills, bond coupon payments and allocations to states and other tiers of government through the Federation Account Allocation Committee (FAAC).
Cash Reserve Ratio (CRR) maintenance and foreign exchange-related activities also shaped the liquidity position. The apex bank said these factors helped keep short-term interest rates relatively stable during the period.
CBN moves to mop up excess cash
With the system awash with cash, the CBN intensified Open Market Operations (OMO) to withdraw some of the excess funds. It offered N3.6 trillion worth of CBN bills during the month.
Demand far outstripped supply. Subscriptions reached N14.4 trillion, and the CBN eventually allotted N12.54 trillion, with stop rates ranging from 19.97% to 21.90%.
The regulator said: "The higher-than-expected subscription reflected liquidity surfeit and attractive returns. Overall, the liquidity operations of the Bank resulted in net withdrawal from the banking system."
Treasury bills and bonds draw heavy demand
The Federal Government also pulled strong demand for its domestic borrowing instruments. Subscriptions for Nigerian Treasury Bills (NTBs) jumped to N4.4 trillion in May, far above the N1.35 trillion initially offered. The 364-day Treasury Bill was the most sought-after instrument during the period.
Long-term securities followed the same pattern. The Federal Government's 10-year and 20-year bonds attracted N800 billion in subscriptions against the N600 billion offered. Stop rates on the bonds stayed within a narrow range of 17.00% to 17.04%.
The CBN linked the demand to attractive returns available to investors and what it described as sustained confidence in the domestic debt market.
Rate cut in view
The CBN had earlier delivered a record 350-basis-point interest rate cut, bringing the benchmark rate to 23%, the largest single reduction in the bank's history, as inflation eased for a third consecutive month. The decision could lower borrowing costs, though commercial banks' reserve requirements remain unchanged.
The heavy OMO mop-up shows the CBN is still working to keep excess liquidity in check even as it loosens the benchmark rate, a balance that matters for lending costs and for how much cash chases the naira.