Interbank Rates Mixed as Banks Boost SDF Placements

Interbank Rates Mixed as Banks Boost SDF Placements

Interbank rates closed on a mixed note as liquidity in the financial system remains positive despite auction outflows. Excess funds peaked at N5 trillion last week and remained strong despite liquidity mop-up efforts from the monetary authority.

The Central Bank of Nigeria (CBN) stepped into the ring to mop up excess funds in the system with two open market operations and treasury bill offers.

Despite these primary actions, the market closed with N3.91 trillion in surplus balances, representing a 58.3% week-on-week surge from N2.47 trillion the previous week.

The funding environment has been flooded with excess funds, and banks continue to pitch their tents at the Standing Deposit Facility to earn below their CBN borrowing rate.

The market witnessed OMO repayments totalling N1.5 trillion, which lifted liquidity levels to around N4.6 trillion midweek.

Despite the robust liquidity, funding rates presented a mixed picture. The Nigerian Interbank Borrowing Rate closed flat at 24.88%, as lending activity in the interbank market remained subdued, Cowry Asset Limited said in a note.

System liquidity was mostly inflows from OMO and Nigerian Treasury bills that matured and steady DMB placements at the CBN’s SDF window. Liquidity conditions improved progressively, rising from ₦3.1 trillion at the start of the week to a peak of ₦5.0 trillion

However, brief contractions from OMO auction (₦1.2 trillion) closed the system liquidity at ₦3.9 trillion. Overall funding conditions remained comfortable, with average cost dropping 4bps week on week.

At the close of business on Friday, the Open Repo Rate (OPR) held steady at 24.50%, while the Overnight Rate (O/N) declined by 7bps to close at 24.79% week on week. MTN Nigeria Lost 8.3% Ahead of Interim Dividend, Potential Offer