Banks’ deposit placements with the Central Bank of Nigeria climbed steadily last week, rising from N2.28 trillion on Wednesday to N2.55 trillion on Thursday, and further to N2.62 trillion by the close of business on Friday, October 24.

Under the Standing Deposit Facility, lenders park excess liquidity with the apex bank, which in turn provides short-term funding to banks through its Standing Lending Facility to meet urgent overnight needs.

As of last Friday, the overnight lending rate stood at 24.8 per cent, according to FMDQ data.

An analysis of CBN data by Nairametrics revealed that during the review week, deposit money banks placed more funds with the CBN than they borrowed.

The opening balances of banks and discount houses, representing the liquid cash reserved for daily banking operations — surged to N637.59 billion on Friday, October 24, 2025, up from N522.09 billion the previous day, as market liquidity strengthened throughout the week.

This marked a sharp rebound from mid-week pressures that saw balances drop to N192.65 billion on Wednesday. Dealers noted that although cash conditions improved significantly, lending activity in the interbank market remained muted amid persistently high benchmark interest rates.

A similar trend was observed earlier in the week, as SDF placements jumped to N1.75 trillion on Tuesday, October 21, from N906.09 billion the previous business day.

Analysts attributed the surge to heightened credit risk concerns and banks’ preference for the safety of the CBN’s window over lending to the real sector.

Although banks continued to channel excess funds to the apex bank, borrowing from the CBN declined as interbank market pressures subsided. SLF requests dropped to N137.10 billion on Friday after peaking at N275 billion on Wednesday, reflecting improved liquidity conditions and a stronger cash position heading into the month’s final week.
Earlier in the week, demand for the Standing Lending Facility remained elevated at N235 billion on October 21, easing slightly from N260.50 billion recorded the previous day.

The mixed trend indicated that while overall system liquidity was improving, some institutions still relied on overnight borrowing to balance their positions.

No repo or reverse-repo transactions were recorded during the week, suggesting that the CBN did not find it necessary to deploy additional liquidity management measures beyond its standing facilities.

Liquidity dynamics during the review period were also influenced by the CBN’s primary market activities and open market operations.

The apex bank re-entered the market on October 21 with OMO bill sales worth N827 billion, following a no-sale session the previous day. This was significantly lower than the N2.12 trillion sold on October 17, reflecting a more moderate liquidity sterilization stance.

Government securities issuance and redemption flows further shaped liquidity conditions.

On October 23, the market recorded N391.59 billion in NTB and bond issuances, while redemptions totaling N378.00 billion the same day helped inject liquidity back into the system.

With no new issuances or repayments on Friday, dealers said residual liquidity from Thursday’s transactions supported the robust cash position in the market.

Analysts noted that if liquidity inflows persist into the final week of October, interbank rates could face mild downward pressure.

The week highlighted a financial system awash with liquidity yet constrained by cautious sentiment, leaving the Central Bank to maintain a delicate balance between preserving stability and encouraging credit expansion as year-end pressures approach.