Overnight Lending Rate Falls as Banks’ Placement Hits N4.4trn

Overnight Lending Rate Falls as Banks’ Placement Hits N4.4trn

Overnight lending rate declined as a strong liquidity level in the financial system kept short-term benchmark interest rates in the money market in check.

Robust liquidity in the financial system has continued to fuel banks deposits at the Apex Bank window in the absence of significant funding pressures.

Without the authority’s open market operations, market analysts said liquidity level in the banking system will continue to expand, and placement with the Central Bank will continue to grow.

Nigerian interbank rates declined across most tenors, except for the 1-month rate, which remained flat at 25.75%, reflecting improved liquidity conditions in the banking system.

Investment firms said in separate reports that the interbank market maintained strong liquidity at ₦4.6 trillion, up from N4.313 trillion in the previous day.

Backed by excess funds in the financial system, deposit money banks (DMBs) remained active with placements at the Central Bank of Nigeria (CBN) Standing Deposit Facility (SDF).

Banks’ placement increased to about ₦4.4 trillion, according to AIICO Capital Limited. As such, the Overnight Policy Rate held at 24.50%, while the Overnight rate decreased by 9 bps to 24.83%.

The Treasury Bills secondary market recorded declines across NITTY yields, as the 1-month, 3-month, 6-month, and 12-month tenors fell by 5 bps, 11 bps, 6 bps, and 2 bps, respectively.

Similarly, the average NT-Bills yield dipped slightly by 5bps to 17.36%, reflecting bullish investor sentiment and sustained demand in the secondary market. Oando Profit Grows by 164% as Group Recognises N182bn Tax Credit