Interbank Rates Ease as Signature Bonus Boosts Liquidity
Interbank rates eased in the money market following a moderate inflow and signature bonus that boosted the balance in the financial system at the beginning of the week. The market also received N9.52 billion in FGN coupon payments.
The liquidity crunch in the banking system has continued to keep interbank rates elevated, and analysts anticipate the trend to persist until next FAAC credits.
While there were inflows, the amount was insufficient to upturn negative liquidity in the banking system, settling at about N1.348 trillion from N1.499 trillion at the weekend.
This caused the short-term benchmark interest rates to remain above 32% apiece while local deposit money banks continue to access funds from the Central Bank of Nigeria (CBN) borrowing window.
The Nigerian Interbank Offered Rate (NIBOR) experienced upward movements across most maturities on Monday, according to Cowry Asset Limited, signalling illiquidity in the banking system.
At the same time, the open repo rate (OPR) and the overnight lending rate (O/N) declined by 0.32% and 0.11%, closing at 32.22% and 32.81%, respectively.
The market witnessed inflows, including the signature bonus, which eased pressures on money pricing slightly on the day. Analysts at AIICO Capital Limited expect rates to remain elevated in the interim, pending the expected FAAC credit of about N793 billion.
The money market closed on Friday with about N1.5 trillion deficit in the banking system, down from N1.596 trillion on Thursday. The liquidity deficit in the banking system was N32,8 billion at the beginning of the previous week before it escalated due to huge OMO auction sales.
Big banks with positive cash flows were demanding higher rates to part with funds in comparison with the standing lending facility rate that has been adjusted for the recent policy rate hike by the CBN.#Interbank Rates Ease as Signature Bonus Boosts Liquidity Seplat Energy Trades Flat Amidst Shares Re-Admission
