Central Bank of Nigeria Launches NOFR Benchmark

The Central Bank of Nigeria announced on Friday the launch of the Nigerian Overnight Financing Rate, a new standardized benchmark designed to enhance transparency and efficiency in the country's money market. The initiative, developed in partnership with the Financial Markets Dealers Association, aims to provide a reliable reference for overnight lending between financial institutions and align Nigeria's financial system with international standards.

The benchmark, known as NOFR, reflects the cost of overnight secured funding in the interbank market and is based solely on actual transactions rather than estimates. According to a statement from the Central Bank, signed by Acting Director of Corporate Communications Hakama Sidi-Ali, NOFR will improve price discovery, promote consistent pricing of money market instruments, and strengthen the transmission of monetary policy. "NOFR was developed to align Nigeria with global best practices in short-term interest rate benchmarks," the statement said. "It is expected to improve price discovery and transparency while promoting consistent pricing of money market instruments."

The rate's introduction followed a stakeholder engagement...