Interbank Rates Dip as Remita, CRR Credits Boost Liquidity

Interbank Rates Dip as Remita, CRR Credits Boost Liquidity

Interbank rates dipped as liquidity pressure in the money markets eased at the beginning of the new week following inflows from Remita, and cash reserve maintenance credits.

Liquidity balance in the banking system stayed on the deficit side, though there was an improvement from inflows from Remita, cash reserves ratio for bank on Monday.

Nigerian Interbank Offered Rate (NIBOR) declined across all maturities, indicating ample liquidity within the banking system, according to Cowry Asset Limited.

According to analysts, the liquidity balance in the financial system was tightened last week due to huge outflow for auctions settlements.   Short-term benchmark interest rates remained at double digits level ahead of next monetary policy committee meeting.

Data from the FMDQ platform showed that the Overnight Policy Rate (OPR) fell by 1.52% to 30.43%, while the Overnight Rate (O/N) decreased by 1.43% to 31.05%.

Rates slowdown even when system liquidity remained negative with showed signs of improvement due to inflows from Remita and net CRR credits.  Analysts at AIICO Capital Limited anticipate that interbank rates will stay at their current levels unless there are any significant debits.

Investment analysts said October saw persistent illiquidity in Nigeria’s interbank market, primarily driven by CBN’s FX interventions, CRR debits, and frequent OMO auction settlements.

The month began with a significant credit of ₦709.32 billion, but liquidity sharply declined throughout the period, averaging a debit of -₦579.71 billion, down from – ₦26.13 billion in September.

FAAC disbursements, Remita credits, and other state inflows temporarily eased liquidity pressures in mid-October, with interbank rates reaching a low of 19%-25% by month-end.

However, funding pressures remained high, with rates spiking up to 34% during peak OMO settlements and closing around 26%-27% after FAAC inflows.

At the end of Oct, Open Repo Rate (OPR) and Overnight Rate (OVN) rose by 2.92% and 2.78%, averaging 30.59% and 30.99%, respectively #Interbank Rates Dip as Remita, CRR Credits Boost Liquidity Nigeria’s Top 5 Banks Total Assets Hit N146 Trillion