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The Central Bank of Nigeria (CBN) withdrew a staggering N13.41 trillion from the financial system in January 2026, nearly five times the N2.77 trillion absorbed in the same month last year.
Statistics from the Financial Markets Dealers Association’s (FMDA) Monetary and Credit Statistics for January 2026 has shown.
The move comes amid declining money supply and subdued private sector credit, highlighting an aggressive tightening stance by the apex bank at the start of the year.
Broad-based liquidity indicators reflect the impact of the CBN’s sterilisation efforts.
Broad Money (M3), a measure of total money supply, fell 0.8 per cent month-on-month to N123.36 trillion from N124.41 trillion in December 2025, while Narrow Money (M2), representing liquid, spendable funds, mirrored this decline to N123.35 trillion.
Private sector credit eased 0.8 per cent to N75.24 trillion, and bank reserves dropped sharply by 5.5 per cent to N30.26 trillion, illustrating the direct effect of massive liquidity mop-ups.
Despite the January contraction, the Monetary Policy Committee’s decision on February 24 to lower the benchmark rate from 27 per cent to 26.5 per cent signals that the apex bank may have reached the peak of its monetary tightening cycle. Analysts anticipate that easing liquidity conditions could gradually improve credit dynamics from March onward.
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A closer look at the banking system’s monetary aggregates reveals contrasting trends in domestic and foreign assets. Net Foreign Assets (NFA) declined 6 per cent to N29.61 trillion, while Net Domestic Assets (NDA) rose 0.9 per cent to N93.76 trillion, supported by domestic credit expansion.
Over the six-month period from September 2025, NFA plunged from N41.66 trillion to N29.61 trillion, while NDA grew steadily from N76.12 trillion to N93.76 trillion, underscoring sustained domestic activity despite tighter foreign liquidity.
Currency Outside Banks (COB) fell 3.7 per cent to N5.21 trillion, even as overall currency in circulation remained broadly stable at N5.73 trillion, pointing to constrained interbank liquidity conditions during the month.
Throughout 2025, the CBN maintained an assertive monetary tightening policy, using Open Market Operations and Treasury bill issuances to mop up excess liquidity, which peaked in November and December.
January 2026’s data confirms a continuation of this policy, while February’s policy rate reduction suggests a pivot towards gradual monetary easing in the months ahead.
FMDA, the professional body of dealing members from commercial banks and other authorized financial institutions, actively trades in Treasury bills, bonds, foreign exchange, money market instruments, and other fixed-income securities in Nigeria’s interbank and over-the-counter (OTC) markets.
