A Second Straight Month of Heavy Inflows
November's projected ₦13.787 trillion follows ₦13.495 trillion of inflows in October, and the association had earlier projected ₦13.25 trillion for October, so actual flows are running ahead of the calendar the market planned around. The composition matters more than the headline. OMO maturities dominate the schedule, which means most of the cash arriving in November is money the central bank itself is handing back to holders of its bills, and the central bank also decides, auction by auction, how much of it to take back.
That circularity is why the FMDA cautions that the projection does not translate one for one into available liquidity. Fresh OMO and Treasury bill issuance, government cash movements and the share of maturing paper that investors roll over will decide how much of the ₦13.79 trillion actually stays in bank balances.
Liquidity Rose in October, Funding Rates Did Not Fall
October showed what happens when the central bank lets maturities run. Average system liquidity climbed 56.75% to ₦7.373 trillion from ₦4.703 trillion in September, a jump the FMDA links to smaller OMO allotments late in the month and to government disbursements landing on top of maturing securities. Yet the price of overnight money hardly responded. The Nigeria Overnight Financing Rate closed October unchanged at 20%, and the overnight rate slipped only five basis points to 20.38%, with the Monetary Policy Rate at 23% after September's 350 basis point cut.
The stickiness is instructive. Banks are long on cash balances but cautious about lending them out overnight at lower rates while the central bank can reverse the surplus at any auction. Until funding rates actually break lower, the liquidity story is one of quantity rather than price, and its transmission into credit and asset prices stays limited.
The Auction Calendar Decides Whether the Cash Stays
For fixed income investors, a long liquidity position usually means stronger demand for Treasury bills and downward pressure on stop rates, provided new supply does not absorb the cash first. The FMDA expects relatively comfortable conditions if the selective allotments seen at the end of October continue. The opposite is equally mechanical: a return to aggressive OMO sales, of the kind that withdrew cash through most of this year, would drain the November inflows as fast as they arrive and reprice short term yields higher. The first November auctions, rather than the projection itself, will show which version of the month the market is getting.
