Banking Sector Liquidity Drops By N557.3bn To N220.7bn

The quantum of liquidity in the banking system dropped by N557.3bn or 71 per cent within a one week period to N220.7bn, a report by Afrinvest has said.

The banking system liquidity had last week Monday risen to N778bn owing to the Central Bank of Nigeria’s four weeks of non-issuance of new Open Market Operations bills.

The OMO is the apex bank’s short-term market instrument to mop-up excess liquidity in the banking sector.

The CBN had last Tuesday debited banks N509.4bn on Cash Reserve Ratio which plunged system liquidity to NN268.6bn.

The apex bank had in a bid to tackle the rising inflation had in January increased the CRR to 27.5 per cent.

According to the report, liquidity further decreased by another N47.9bn to N220.7bn in one week.

The further dip in system liquidity was due to the absence of inflows from maturities and Federal Account Allocation Committee disbursements during the week.

Liquidity is expected to improve as maturing Treasury Bills and Open Market Operation instruments worth N56.8bn and N88.0bn respectively will hit the system.

The apex bank had slated to rollover the maturing Treasury Bills at the Primary Market Auction on Wednesday, the report added.