Kayode Tokede
The Central Bank of Nigeria (CBN) has revealed that total overnight financing market Rate (NOFR) closed August 2026 at N98.08 trillion, representing about 6.5 per cent Month-on-Month (MoM) decline from N104.9 trillion total traded volume reported in July 2026.
Analysts stated that the August 2026 decline in NOFR is best interpreted as a sign of easing pressure in the overnight money market as banks had less need to source funds overnight from the interbank market.
The NOFR is the benchmark measure of unsecured overnight borrowing costs in the domestic money market and serves as a key indicator of short-term liquidity conditions.
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 reported N104.9 trillion in July 2026 makes it the highest overnight financing market funds volume since it was launched in April 2026 by the Olayemi Cardoso-led CBN governor.
Analysis of CBN numbers showed that total traded volume increased 32.6 per cent MoM to N96.36 trillion in May 2926 from N72.66 trillion in April 2926, reflecting a significant pickup in overnight market transactions.
The CBN’s August 2026 data showed NOFR’s minimum rate stood around 20.50 per cent while the maximum rate closed the month under review at 27.00 per cent from 22.00 per cent it closed for July 2026.
The data also revealed further that April 13 and July 31, 2026, shows that the NOFR remained virtually unchanged at 22.00 per cent throughout the period under review.
Amid weaker market activity, the benchmark overnight funding rate barely moved, closing lowest at exactly 22.00per cent maximum rate out of 31 days captured in the data published by the CBN at the close of business on August 31, 2026
The CBN data points to a notable increase in overnight market activity beginning in May 2026, with volumes remaining elevated through July 2026 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.
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.
At the event, 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 added.
Commenting, the Managing Director, Highcap Securities, Mr David Adnori stated that the CBN’s NOFR is therefore not simply about replacing one reference rate with another.
“It is part of a broader attempt to modernise the financial system by making market information more reliable, pricing more transparent and monetary policy transmission more effective,” he said.