Interbank Rates Slide as Financial System Deficit Eased
Interbank rates declined slightly to reflect moderate liquidity improvement in the financial system on Monday. The short-term benchmark interest rates had adjusted much higher over the previous week due to tight funding profiles.
Liquidity balance in the money market is expected to improve; analysts anticipate inflows from the Federal Allocation Account Committee to hit the financial systems’
FAAC recently disbursed N1.41 trillion to three tiers of government from federally collected revenue. According to investment analysts, a chunk of the amount is expected to hit the financial system; boost the liquidity positions in the banking system.
Based on the stipulated sharing revenue formula, the FGN received N433.02 billion, up from N424.87 billion in Sept. The state governments received N623.00 billion as against NGN544.14 billion in September, while the local governments received N355.62 billion versus N329.86 billion in September.
On Monday, the financial system opened with a deficit of about N270 billion, up from N321.5 billion of negative liquidity on Friday. In the absence of inflows from matured financial instruments, a slew of analysts anticipate liquidity conditions could take rates above 33%.
Banks stepped up borrowing last week, raising more than N2 trillion from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (CBN) at double digits in an effort to meet the liquidity requirement and fund operations.
According to Cowry Asset Limited, the Nigerian Interbank Offered Rate (NIBOR) rose across most maturities, except for the Overnight NIBOR, which declined by 0.55%, reflecting improved liquidity in the banking system.
Data from the FMDQ platform revealed that the overnight policy rate (OPR) decreased by 13 bps to 32.06%, while the overnight lending rate (O/N) fell by 25 bps to 32.56%. #Interbank Rates Slide as Financial System Deficit Eased FBN Holdings Sheds 8% as Investors Exit Positions
