Money Market Rates Diverge as Banking Deficit Hits N1.58trn
Interbank liquidity worsened further, sinking deeper into negative territory, highlighting the ongoing liquidity crunch in the financial system. Hence, money market rates were further pressured as banks faced a huge liquidity deficit totalling N1.58 trillion, up from N1.064 trillion the previous day.
To meet liquidity demand, banks access funds from the Central Bank of Nigeria (CBN) Standing Lending Facility (SLF) again. Despite a huge amount taken out, the banking deficit widened further amidst the treasury bills auction for midweek.
The market anticipates the net treasury bills auction settlement of about ₦504 billion would alleviate pressure on interbank rates on Thursday. The Nigerian Interbank Offered Rate (NIBOR) exhibited mixed movements across tenors.
Similarly, key money market indicators showed a varied trend, with the Open Repo Rate (OPR) declining by 0.06% to 32.29%, while the Overnight Lending Rate edged up by 0.13% to 32.83%.
Analysts expect the net impact of the Nigerian Treasury bills auction settlement worth ₦505 billion to keep interbank rates at the current level. The repo rates have been more attractive, and bills are expected to appreciate.
It’s also worth noting that the Central Bank of Nigeria might cut rates more than anticipated because of rebased inflation data. For mutual funds, performance has been positive, and analysts are predicting that positive real returns will rub off on portfolio returns.
#Money Market Rates Diverge as Banking Deficit Hits N1.58trn Yield on Nigerian Treasury Bills Falls ahead of Rebase Data
