Nigeria’s Financial Pulse: Inside the Money Market Moves of May 2025

How short-term instruments are driving long-term economic shifts.

Nigeria’s money market is buzzing with fresh energy this May, reflecting the country’s evolving economic landscape. As the Central Bank of Nigeria (CBN) and financial institutions navigate tight liquidity, investors and observers alike are paying closer attention to short-term instruments that fuel the economy behind the scenes.

From record-breaking Treasury Bill sales to surging interbank rates and rising popularity of Money Market Mutual Funds (MMMFs), here’s everything you need to know about Nigeria’s money market activity this month—
Treasury Bills Demand Surges as CBN Pulls the Strings: One of the most significant developments this month came from the Treasury Bills segment. The Central Bank of Nigeria (CBN) auctioned ₦598.34 billion in Treasury Bills on May 7, 2025.

The CBN offered ₦550 billion worth of Nigerian Treasury bills across three tenors: 91-day, 182-day, and 364-day bills. Investors sought to park ₦1.087 trillion, exceeding the amount the authority planned to mop up. The allotment and rates were as follows: 91-day bill: ₦77.22 billion allotted at 18% interest rate, 182-day bill: ₦33.50 billion allotted at 18.50% interest rate, 364-day bill: ₦482.62 billion allotted at 19.63% interest rate. The move was a clear signal of the apex bank’s intent to manage liquidity while addressing inflationary pressures.

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While discount rates on the shorter-term bills were held steady, the CBN hiked rates on the 364-day offering. Analysts view this as a strategy to attract more investors amid tightening financial conditions. Notably, oversubscription led the CBN to reject excess bids, highlighting a robust appetite among institutional investors.

Certificates of Deposit Holding Steady Amidst Global Calm: Although Certificates of Deposit (CDs) in Nigeria have been under the radar this month, global trends offer a clue. With the U.S. Federal Reserve maintaining its benchmark interest rates, CD rates have remained largely stable. This global calm suggests that Nigerian banks are likely offering consistent returns on CDs, making them a relatively safe haven for risk-averse investors in a volatile market.

Repurchase Agreements The Silent Force Behind Bank Liquidity: While repurchase agreements (repos) haven’t dominated headlines in Nigeria this May, they remain a silent but crucial part of the financial infrastructure. These agreements—used by banks and financial institutions to meet short-term funding needs—help keep the system flowing smoothly. Amid the ongoing liquidity crunch, repos continue to provide a vital backstop, even if they rarely make it to the news. Like repos, Bankers’ Acceptances haven’t featured prominently in recent news. Still, they continue to play an essential role in international trade finance, offering guarantees that help businesses execute cross-border transactions with greater confidence.
Perhaps the most telling signal of market tension is the spiking interbank rate. In January, the rate hit a five-year high of 28.58%, a figure that still resonates as banks adjust to the CBN’s liquidity tightening measures. Though this specific rate hasn’t been updated in May, the aftershocks are still being felt. The high cost of borrowing between banks means institutions are seeking alternatives—like issuing commercial papers—to stay liquid.

Money Market Mutual Funds, The New Darling of Nigerian Investors: If one sector is basking in the limelight, it’s Money Market Mutual Funds. With yields as high as 25% per annum, MMMFs have become a magnet for Nigerian investors looking for high returns with relatively low risk. The surge in interest has been driven by tightening lending conditions and the desire for safer, more predictable earnings. As MMMFs attract more retail investors, they’re reshaping the investment landscape in subtle but powerful ways.

Beyond the instruments, the Central Bank has remained active in regulatory oversight: Cheque Standardization: Banks have been directed to strictly follow updated Magnetic Ink Character Recognition (MICR) codes to reduce rejected cheques.

Foreign Exchange Market Oversight: Guidelines were issued to Bureau de Change operators and International Money Transfer Operators (IMTOs) to maintain FX spreads within +2.5% of the market rate and avoid arbitrary pricing.

Open Market Operations: Treasury bill auctions and other OMO activities continue to reflect the CBN’s commitment to controlling money supply.
Behind the Numbers, a Story of Resilience and Strategy. CBN is clearly using every tool at its disposal to strike a balance between tightening inflation and maintaining liquidity. Meanwhile, banks and investors are adjusting, innovating, and shifting positions in response.

From Treasury Bills flying off the shelves to MMMFs winning hearts, and interbank rates keeping bankers on edge, the money market is far from static—it’s alive, adapting, and influencing Nigeria’s broader economic journey in 2025.

Stay tuned. The pulse of the money market beats louder than ever.