Interbank Rates Diverge Amidst Huge Liquidity Deficit
The short term benchmark interest rates diverged on the back of relatively lower funding demand as banking system faced huge liquidity deficit. Liquidity challenge in the money market increased due to outflows ahead of OMO bill auction on Thursday. Market participants switched to cautious mode ahead of N600 billion OMO auction.
The financial system opened with a negative balance of N668.26 billion, a significant increase from about N573 billion negative balance in the prior day. The financial system liquidity worsened following Remita outflow in the absence of significant inflows from matured instruments.
Due to tight liquidity condition in the money market, the open repo rate edged up by 2bps to 32.38%, in the absence of inflows. Meanwhile, the overnight lending rate moved in the opposite direction, declining by 11bps to 32.75%, according to data from the FMDQ platform,
“We expect the system liquidity to be in red, as it gears up for OMO auction worth ₦600 billion, and interbank rate to maintain its current levels”, TrustBanc Financial Group Limited said in a note. The Nigerian Interbank Offered Rate (NIBOR) exhibited mixed movements across all tenors, according to Cowry Asset Limited.
The firm reported that the Overnight and 1-month tenors declined by 0.04% and 0.06% to 32.82% and 27.83%, respectively, while the 3-month and 6-month tenors increased by 0.70% and 0.59% to 28.61% and 29.63%, respectively. #Interbank Rates Diverge Amidst Huge Liquidity Deficit M&A Possibility Reduces as Nigerian Banks Progress Towards New Capital –Fitch
