Banks’ deposits with the Central Bank of Nigeria (CBN), known as the Standing Deposit Facility (SDF), rose to a seven-month high of ₦7.33 trillion a day after the apex bank reset its benchmark interest rate, reflecting elevated liquidity in the financial system.
Data from the CBN showed that SDF holdings jumped by 62.75 percent in a single trading day to ₦7.33 trillion on Wednesday, from ₦4.51 trillion on Tuesday.
The last time banks’ deposits with the apex bank reached a comparable level was on March 30, 2026, when SDF holdings stood at ₦7.09 trillion.
Ayokunle Olubunmi, head of Financial Institutions Ratings at Agusto & Co., said the development reflected the high level of liquidity in the financial market.
The increase came a day after the CBN, following its two-day Monetary Policy Committee (MPC) meeting, cut its benchmark interest rate, the Monetary Policy Rate (MPR), by 350 basis points to 23 percent from 26.5 percent.
The unusually large rate cut followed a period in which prevailing money-market rates had moved below the previous 26.5 percent policy benchmark, weakening the effectiveness of the MPR as a signal for market interest rates.
Analysts at Coronation Merchant Bank said much of the rate adjustment had already been priced into the front end of the fixed-income market. The 364-day Nigerian Treasury Bill (NTB) stop rate fell by 97 basis points across the three auctions preceding the decision, from 17.59 percent on August 26 to 16.62 percent on September 9.
“We expect a further 100–150 basis points of compression over the next one or two auctions, taking the rate toward 15.00–15.50 percent, after which we expect the decline to stall. At 16.62 percent, one-year bills already clear roughly 540 basis points below the prevailing overnight rate, meaning the position offers structurally negative carry for banks. The demand has instead been driven by pension fund administrators (PFAs) and asset managers with captive naira liquidity.”
The analysts said the reset of the Standing Deposit Facility (SDF) rate to 20.00 percent narrows that negative carry to around 340 basis points, which mechanically supports demand for NTBs, but does not eliminate the underlying constraint.
