The Central Bank of Nigeria (CBN) absorbed over N3.57 trillion. Within three days as deposit money banks placed surplus funds in the Standing Deposit Facility (SDF).
The SDF allows banks to store excess cash overnight at an interest rate of approximately 22.8%, according to FMDQ.
An analysis of CBN’s financial data from Tuesday, February 17 to Thursday, February 19, 2026. Reveals the scale of liquidity management operations by the apex bank. This comes amid high system balances and strong demand for government securities.
The liquidity mop-up followed system liquidity exceeding N4 trillion, as noted by Coronation Research in their Nigeria Weekly Update on Friday, February 13. Despite absorbing trillions through Open Market Operations (OMO) and primary market issuances. Banks continued to channel significant funds into the SDF window.
Key Data Highlights
Between February 17 and February 19, the CBN sterilised over N3.57 trillion through OMO sales, primary market issuances. And SDF placements, responding to excess liquidity in the system.
- System Liquidity Trends: Liquidity strengthened midweek, closing at N4.32 trillion on Friday. SDF placements rose sharply from N2.52 trillion at the start of the week to N4.26 trillion.
- Net Absorptions: On February 17, the CBN absorbed N435 billion after OMO sales of N2.30 trillion were offset by N1.87 trillion in maturities. On February 19, treasury bills and bond sales of N1.91 trillion exceeded repayments of N765.89 billion, resulting in a net absorption of N1.14 trillion.
- Daily SDF Placements: Banks maintained nearly N3 trillion in daily SDF placements. Including N3.35 trillion on February 17 and N2.97 trillion on February 19, despite ongoing mop-up operations.
- Market Instruments: Direct market instruments accounted for N1.57 trillion in withdrawals. While persistent SDF usage highlighted the scale of sterilisation efforts.
Expert Insights
Analysts suggest the elevated liquidity reflects structural and fiscal factors rather than immediate funding stress. As Standing Lending Facility usage remained minimal.
“Liquidity conditions strengthened notably from midweek, closing at N4.32 trillion on Friday,” Coronation Research analysts noted. “SDF placements increased significantly, reflecting surplus reserves in the banking system.”
Olubunmi Ayokunle, Head of Financial Institutions Ratings at Augusto & Co., explained, “High liquidity isn’t necessarily bad, but it must be managed effectively. Expansionary government spending, such as infrastructure projects or economic stimulus, often leads to liquidity surges.”
Ayokunle attributed the liquidity build-up to high FAAC allocations, lingering effects of Ways. And Means financing from the previous administration, and gradual economic recovery. He noted that funds disbursed for projects often re-enter the banking system.
What You Should Know
The CBN’s multi-trillion-naira sterilisation efforts come at a significant fiscal cost. These measures aim to curb inflation and prevent surplus liquidity from undermining monetary tightening objectives.
