Interbank Rates Dip as Liquidity Pressure in Financial Market Eased
Interbank rates declined in the money market due to the latest inflows that saturated the financial system. Rates remained in double digits high due to a weak funding profile. Investment banking firms reported that the liquidity level in the financial system has been closing net short persistently in the past week.
When market liquidity closed negative at -N1.4 trillion on Friday, Call, overnight, and repo rates closed within the range of 8% – 32.8%, according to Coronation Research.
According to a slew of analysts, the financial liquidity would remain under pressure as investors and other market participants bid for government borrowing instruments in the primary market auctions.
After local deposit money banks kick started borrowing from the Central Bank of Nigeria this week, the negative balance in the financial markets reduced. Opening system liquidity improved significantly on the back of the latest inflow from maturing OMO bills.
As a result, the Open Repo Rate (OPR) and the Overnight Rate (O/N) declined by 49 basis points and 56 basis points to 31.90% and 32.25%, respectively.
“We expect the interbank rates to maintain current levels:, AIICO Capital Limited said in a note. In September, the interbank market liquidity fluctuated significantly, opening in a credit of ₦579.34 billion and closing in a debit of ₦530.81 billion mid-month before recovering to ₦785.85 billion by the end of the month. #Interbank Rates Dip as Liquidity Pressure in Financial Market Eased
