Nigeria's financial system is set for a substantial liquidity surge in May 2026, with total inflows projected to climb to N10.53 trillion, a notable increase from N9.08 trillion in April. This rise is primarily attributed to higher maturities from Open Market Operations (OMO) and Treasury bills, according to the Financial Markets Dealers Association (FMDA).
OMO maturities are expected to contribute the largest share, escalating to N7.17 trillion from N5.88 trillion in April. Treasury bill maturities are also anticipated to see a significant jump of 45.28 percent, reaching N1.05 trillion. Additionally, corporate bond coupon payments are projected to surge more than threefold to N95.09 billion.
Despite these increases, the report indicates a slight decline in inflows from Federal Government bond coupons and commercial paper maturities. Federation Account Allocation Committee (FAAC) disbursements are also expected to moderate to N1.8 trillion from N2.04 trillion in April. Nevertheless, the overall liquidity outlook for May remains robust, suggesting improved funding conditions and potential downward pressure on short-term yields.
The Naira demonstrated appreciation across both official and parallel segments in April, bolstered by improved foreign exchange liquidity. Total turnover in the Nigerian Foreign Exchange Market (NFEM) rose to $8.51 billion during the month. Exchange rate movements were influenced by global financial conditions and capital flows, with increased oil production and portfolio inflows providing support.
Looking ahead, the FMDA cautioned that the Naira could face mild pressure from maturing securities, particularly the substantial OMO maturities exceeding N7 trillion. However, inflows from autonomous sources are expected to offer some buffer against potential volatility.
In the fixed income market, FGN bond yields exhibited mixed movements in April, with declines at the short and long ends of the curve, while mid-tenor yields saw a slight increase. Treasury bill yields generally declined, reflecting improved demand and easing short-term rates.
Meanwhile, economists surveyed by Nairametrics forecast a cautious outlook for Nigeria's April inflation print, with most projections indicating that price pressures will remain elevated. Stubborn cost drivers, including exchange rate volatility, high transport and energy costs, and persistent food supply constraints, are expected to keep inflation sticky in the near term. Johnson Chukwu of Cowry Assets Management Limited anticipates an increase of at least 20 basis points, potentially pushing inflation between 15.6% and 15.8%. Dr. Muda Yusuf of the Center for the Promotion of Private Enterprise (CPPE) also noted rising fuel and shipping costs as significant inflationary factors.
The Naira has shown remarkable stability against the US dollar since late 2024, settling in the $1: N1,350–1,430 range by May 2026, with daily volatility dropping sharply. This stability is partly attributed to the Dangote Petroleum Refinery, which has significantly reduced Nigeria’s foreign exchange demand for fuel imports. The CBN data shows the Naira appreciated to N1,362/$ on Tuesday, extending its gains from N1,367.5/$ on Monday. Intraday trading on Tuesday ranged between N1,362/$ and N1,370.5/$, with an average of N1,366.27/$.
