N10.9trn Inflows To Boost June Market Liquidity Amid OMO Maturities

Nigeria’s financial system is expected to experience strong liquidity conditions in June, as inflows estimated at N10.9 trillion are projected to hit the market, driven largely by Open Market Operations (OMO) maturities.

According to the Financial Markets Dealers Association (FMDA) May monthly report, the anticipated inflows represent a 3.51 per cent increase compared to May’s N10.53 trillion, with OMO maturities accounting for about 71 per cent of total inflows.

The report showed that N7.77 trillion in maturing OMO instruments is expected in June, up from N7.17 trillion in May. In addition, about N1.8 trillion is expected to flow in from the Federation Accounts Allocation Committee (FAAC).

Treasury bill maturities are, however, projected to decline to N995.81 billion in June from N1.05 trillion in May, while FGN bond coupon payments are expected to generate N278.99 billion, down from N346.14 billion in the previous month.

Corporate bond maturities are also expected to fall to N49.04 billion compared to N95.09 billion in May, while commercial paper maturities are projected at N10.46 billion, down from N59.5 billion in the preceding month.

The FMDA noted that despite the strong liquidity outlook, the eventual impact may be moderated by further liquidity sterilisation measures from the Central Bank of Nigeria (CBN).

It added that the apex bank had withdrawn an estimated N12.06 trillion through liquidity management operations in May, even as average system liquidity rose by 7.76 per cent to N5.22 trillion within the same period.

According to the association, elevated liquidity conditions are expected to continue supporting demand for fixed income securities, even as rising global bond yields may sustain investor appetite for attractive domestic instruments.

It also noted that higher crude oil prices and improving external reserves are expected to strengthen macroeconomic stability in the near term, helping to contain funding pressures within the financial system.

However, the FMDA cautioned that foreign exchange pressures remain a key risk despite recent improvements in external reserves. It advised investors to position their portfolios to benefit from elevated liquidity and the sizeable inflows expected in June, while maintaining prudent foreign-exchange risk management strategies.

In the foreign exchange market, the naira depreciated marginally in the Nigerian Foreign Exchange Market (NFEM) during the review period, despite an increase in total FX turnover to over $8 billion.

The report attributed the activity to improved market participation and increased dollar transactions during the period.

Meanwhile, global crude oil prices remained elevated on average in May at $102.40 per barrel, although recent optimism about possible peace negotiations in major conflict regions has pushed prices below $100 per barrel in recent days.