Nigerian banks choose deposit window over lending amid economic uncertainty

• Nigerian banks person deposited N2.5 trillion with the CBN done the Standing Deposit Facility arsenic they question to negociate liquidity amid a tightening monetary argumentation
• Despite a strategy liquidity shortage of N119.9 cardinal and rising outflows into the CBN’s deposit window, interbank rates somewhat eased past week
• Analysts spot banks’ penchant for depositing funds implicit lending arsenic a cautious effect to economical changes and ongoing efforts to stabilise ostentation and currency rates

Legit.ng writer Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

To maximise returns connected excess funds amid a dynamic monetary argumentation environment, Nigerian banks person deposited a full of N2.5 trillion with the Central Bank of Nigeria (CBN) done the Standing Deposit Facility (SDF).

Analysts observed that banks’ penchant for the deposit model implicit lending suggests a cautious approach. Photo Credit: Contributor
Source: Getty Images

Tribune reported that the improvement marks a important stride successful liquidity management.

Increased caution successful the interbank marketplace and banks' strategical tendency to store excess liquidity with the CBN astatine comparatively favorable involvement rates were down past week's important influx into the SDF.

This enactment occurred astatine a clip erstwhile marketplace experts reported that strategy liquidity ended the week with a shortage of N119.9 billion, representing a 42.0% play decrease.

A large origin contributing to the liquidity unit was the important outflow into the CBN's deposit window, which greatly outstripped the N949.2 cardinal that banks were capable to entree done the Standing Lending Facility (SLF) implicit the aforesaid period.

The Open Buy Back (OBB) and Overnight (OVN) rates ended the week astatine 26.4 percent and 26.9 percent, respectively, down from 26.5 percent and 27.0 percent the erstwhile week, indicating a flimsy easing of interbank rates contempt liquidity pressures.

This suggests that though wide liquidity remained limited, backing costs whitethorn person eased somewhat.

Analysts observed that banks’ penchant for the deposit model implicit lending suggests a cautious attack amid ongoing economical changes, tightening by the apex bank, and measures to stabilise inflation and currency rates.

The CBN's SDF and SLF tools, which alteration it to power short-term liquidity and nonstop involvement rates successful the fiscal sector, proceed to beryllium indispensable components of its monetary argumentation framework.

A large origin contributing to the liquidity unit was the important outflow into the CBN's deposit window. Photo Credit: Contributor
Source: Getty Images

Naira appreciates arsenic CBN announces caller involvement complaint

Legit.ng reported that As the Central Bank of Nigeria (CBN) decided to support the Monetary Policy Rate (MPR) astatine 27.5%, the worth of the naira accrued by 0.5% against the US dollar.

According to BusinessDay reports, information from the Nigerian Foreign Exchange Market (NFEM) connected Tuesday, May 20, 2025, indicated that the section currency closed astatine N1,590.45 per dollar, representing a summation of N8.23 implicit the complaint of N1,598.68 the erstwhile day.

Street merchants quoted the dollar astatine N1,620, and the naira traded steadily successful the parallel marketplace contempt the summation successful the authoritative window.

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Source: Legit.ng