Money Market Rates Mixed as System Liquidity Falls by 38%
Money market rates were mixed as the financial system liquidity declined by approximately 38% on Wednesday following aggressive open market operations by the authority.
The Central Bank of Nigeria (CBN) mopped up about N4.8 trillion from the financial system in two days through OMO bills auctioned to market participants.
The monetary authority’s action sharply reduced excess liquidity, even without a midweek treasury bills auction, following a previous review of its circular.
MarketForces Africa reported that the CBN reviewed Nigerian Treasury bills offers to N1 trillion across three standard tenors at the previous operation, from N450 billion.
A total of N1.2 trillion was mopped up from the banking system, followed by another round of liquidity operations on Monday and Tuesday.
The financial system liquidity declined by 37.77% to N3.82 trillion, according to Meristem Securities Limited, driven by primary market sales of N1.22 trillion.
Despite this, money market rates eased further, with the Overnight rate falling to 22.15% from 22.30% previously, while the Open Repo rate remained unchanged at 22.00%.
The Nigerian Interbank Borrowing Rate (NIBOR) curve shifted lower across all maturities on Wednesday, reflecting tightened system liquidity, according to Cowry Asset Management Limited.
The overnight, 1-month, 3-month, and 6-month tenors declined 28bps, 70bps, and 96bps, respectively, while funding rates were mixed, as the Overnight rate eased 18bps to 22.15% and the Open Repo rate held steady at 22.00%
Overall, the average Nigerian Treasury Bills yield surged 17 bps to 18.15%, indicating bearish sentiment in the fixed-income market amid softer investor demand and subdued trading activity.
