Rates Mixed as OMO Inflow, Banks’ Placement Boost Liquidity
Interbank rates mixed as the repayment of OMO bills and the placement of funds by deposit money banks (DMBs) at the Central Bank of Nigeria’s (CBN) Standing Deposit Facility (SDF) enhanced liquidity within the financial system.
The money market remained flooded with a flow of cash as banks took advantage of placements with the CBN to drive earnings growth.
It was also noted that some local lenders were at the Standing Lending Facility (SLF) to patch their respective liquidity gaps at a rate above the average return on short-term investment securities.
The financial system liquidity opened the day with an improved surplus balance of N2.21 trillion, reflecting an increase of N740.03 billion from the previous session.
This increase was notably driven by the N810.10 billion inflow from OMO maturities, as well as sustained large placements at the SDF window amounting to N1.40 trillion, 5% below previous close.
However, the liquidity position was offset by N101.50 billion that some deposit money banks, mostly tier-2 lenders, borrowed from the CBN SLF.
Nigerian Interbank Offered Rates showed divergent movements across tenors on Tuesday, with the overnight rate advancing 2bps to 22.84%, indicating reduced system liquidity.
Mirroring the latest dynamics in the money market, the average funding cost rose slightly by 1bp to 22.60%, investment banking firms reported.
Data from the FMDQ platform revealed that the Open Repo Rate (OPR) remained at 22.50% while the Overnight Rate (OVN) spiked by 2bps to close at 22.70%.
In a similar pattern, Treasury Bills secondary market yields exhibited varied performance, with the 12-month maturity declining 17bps, while the 1-month, 3-month, and 6-month tenors climbed by 46bps, 13bps, and 3bps respectively.
The composite Nigerian Treasury Bills average yield stayed flat at 18.02%, reflecting stable investor sentiment in the secondary market. Daily FX Update: Naira Falls to N1,495 in Parallel Market
