Financial System Liquidity Spikes 40% on OMO Repayment
The Nigerian financial system liquidity spiked more than 40% following a significant OMO bill repayment by the Apex Bank to eligible investors on Tuesday.
The authority settled N2.07 trillion in OMO repayments, which significantly improved liquidity conditions in the money market and could drive Nigeria’s inflation risks.
Deposit Money Banks (DMBs) have been rotating funds into the Central Bank standing deposit facility as an alternative to risk lending, an action which continues to boost money market liquidity.
System liquidity improved sharply by +40.17% to NGN6.90 trillion, according to Meristem Securities Limited, which said the boost was driven by N2.07 trillion repayment of the matured OMO instrument.
Meanwhile, the standing deposit facility balance declined slightly by 1.43% to N4.57 trillion, the investment bank reported. However, money market rates held steady, with the Overnight (OVN) rate at 22.21%, and the Open Repo (OPR) rate at 22.00%.
The short-term benchmark rates are expected to remain tight as liquidity is expected to remain strong ahead of OMO bill settlement. The CBN sold about N1.6 trillion in short-term investment securities to market participants at the OMO auction floated on Tuesday.
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