Overnight Lending Rate Falls as Excess Liquidity Tops N7trn
Overnight lending rate fell, while repo rate stayed unchanged on the back of surplus money market liquidity, supported by activities of banks and primary market repayment.
Excess liquidity in the financial system topped N7 trillion due to inflows from matured OMO bills repayment, while banks stepped up placement at the Central Bank of Nigeria (CBN) standing deposit facility.
System liquidity surged by+31.65% to N7.07 trillion from N5.37 trillion at the previous close. The market experienced a significant increase in liquidity, supported by a N1.69 trillion OMO repayment and a +1.37% increase in the standard deposit facility.
This substantial funding level affected short-term benchmark interest rates in the money markets, with open repo and overnight lending rates moving in opposite directions.
Funding costs diverged, with data from the FMDQ platform showing that the overnight lending rate declined by 12bps to 22.17%, while the Open Repo (OPR) rate remained unchanged at 22.00%.
The Nigerian Interbank Offered Rate (NIBOR) recorded mixed movements on Tuesday, analysts at Cowry Asset Management Limited reported.
Yields declined across the overnight and 1-month tenors by 4bps and 3bps, respectively, while the 3-month and 6-month tenors rose by 6bps and 17bps, respectively, reflecting improved liquidity conditions within the banking system. CBN Hikes Rate on 364-Day Treasury Bill to 16.73%
