Banks Lodgements with CBN Keeps Liquidity Profile Strong
Excess liquidity in the financial system surpassed N2 trillion as deposit money banks (CBN) increased their lodgements with the Central Bank of Nigeria (CBN).
The liquidity conditions remained strong in the absence of a primary market auction despite recent inflows from OMO bills maturities.
There was activities at the CBN standing lending facility this week, suggesting potential pressure in the financial system. The market anticipates potential open market operation to reduce excess funds in the banking system ahead of additional inflows.
Market analysts highlighted that the surplus funding profile kept short-term benchmark interest rates movement in check, though funding cost has been fluctuating in line with the money market dynamics.
System liquidity remained relatively buoyant, closing today’s session at ₦2.07 trillion as deposit money market lodgements to the CBN rose to ₦1.98 trillion from N1.40 trillion.
Meanwhile, average funding cost rose slightly by 1bp to 22.61% as the Open Repo Rate (OPR) remained at 22.50% while the Overnight Rate (OVN) spiked by 1 bp to close at 22.71%.
The secondary market for Nigerian Treasury bills traded bearishly as average yield expanded by +17 bps to close at 18.34% driven by sell pressures on the short, mid and long tenors. MTN Nigeria Rallies to Record High on Renewed Investor Confidence
