Overnight Financing Market Rises to N87.9trn as Maximum Rate Drops to 22%
Kayode Tokede
The Central Bank of Nigeria (CBN) has revealed that the total traded volume at Nigeria’s Overnight Financing Market increased to N87.9 trillion in 19 days of business activities of July 2026 as the maximum rate dropped to 22 per cent from 32 per cent in June 2026.
The Nigeria’s Overnight Financing Rate (NOFR) is designed to serve as Nigeria’s overnight risk-free reference rate, reflecting the cost of secured overnight Naira funding among eligible financial institutions.
As a robust and transaction-based benchmark, NOFR is aimed to support accurate pricing of financial instruments and promote standardization in financial contracts, deepen market development, and align Nigeria with global best practices in benchmark rate reforms.
The CBN had officially introduced the NOFR on April 17, 2026, when it announced the new benchmark in collaboration with the Financial Markets Dealers Association (FMDA) as the formal public launch ceremony was held June 15, 2026 in Abuja.
According to the CBN’s data, the overnight funding market recorded a sharp increase in trading activity in May 2026 and sustained the momentum through June 2026.
The data by CBN revealed that the total traded volume moved up by 43 per cent to N96.36 trillion in May 2026 from N67.58 trillion in April 2026, before advancing further by 1.13 per cent to N97.45 trillion in June 2026.
An analysis of daily NOFR market data between April 13 and July 9, 2026, shows that the NOFR remained virtually unchanged at 22.00 per cent throughout the period under review.
Despite the stronger market activity, the benchmark overnight funding rate barely moved, closing at exactly 22.00 per cent maximum rate on eight trading days out of 19 days captured in the data published by the CBN at the close of business on July 27, 2026
However, the rate edged up only three times at 32 per cent —July-16-2026, July-08-2026 and July-07-2026.
CBN data points to a notable increase in overnight market activity beginning in May, with volumes remaining elevated through June without triggering meaningful changes in funding costs, allowing banks and other market participants to execute larger volumes of overnight transactions without exerting upward pressure on borrowing rates.
At a forum to announce NOFR, CBN Governor, Olayemi Cardoso described NOFR as a key reform aimed at enhancing transparency, improving monetary policy transmission, and aligning Nigeria’s money markets with global benchmark reforms such as SOFR (U.S.), SONIA (U.K.), €STR (Eurozone), and TONA (Japan).
Cardoso had said, “The introduction of NOFR represents a significant reform that reinforces the Central Bank of Nigeria’s commitment to building a more resilient, efficient, and credible financial services sector.”
He explained that benchmark interest rates serve as the backbone of modern financial systems because they provide reference points for pricing financial instruments, managing liquidity and transmitting monetary policy decisions across the economy.
According to him, global financial markets have increasingly moved away from judgment-based benchmarks towards transaction-based rates derived from actual market activities in order to reduce the risk of manipulation and improve transparency.
Cardoso noted that the CBN developed NOFR in collaboration with the Financial Markets Dealers Association and with technical support from the European Bank for Reconstruction and Development.
He said the benchmark was designed as a transaction-based overnight secured interbank financing rate that reflects the true cost of overnight funding in Nigeria’s money market.
“By anchoring the benchmark on observable transactions, NOFR enhances market integrity and credibility, reduces reliance on subjective estimates, minimises the risk of manipulation, and improves price discovery and transparency,” he stated.
He added that the new framework would strengthen confidence in Nigeria’s financial markets and support efforts to deepen market activities.