Money Market Rates Fall Sharply as Liquidity Pressures Ease
In the money market, the short term benchmark interest rates declined due to strong inflows that reduce liquidity pressures in the banking system. Hence, the Nigerian Interbank Offered Rate (NIBOR) declined across all tenors as a results of improved funding profile that forced local deposit money banks to scale back on borrowings.
Data from the FMDQ securities platform cited by investment firms showed that key money market indicators trended downward, with the Open Repo Rate (OPR) falling by 4.92% to 28.50% and the Overnight Lending Rate decreasing by 4.50% to 28.33%.
The deficit in the financial system narrowed by 94% to ₦56.83 billion, as withdrawals by Deposit Money Banks (DMBs) from the CBN’s Standing Lending Facility (SLF) window declined to ₦486.23 billion, from ₦1.71 trillion, TrustBanc Financial Group Limited reported.
The interbank market has been facing persistent liquidity challenges throughout February, driven by significant outflows from OMO and FGN bond settlements.
The month began with a liquidity shortfall following a ₦1 trillion OMO auction and CRR deductions, pushing the Overnight Policy Rate (OPR) and Overnight Rate (OVN) above 32%.
The rates fluctuates as the Central Bank of Nigeria (CBN) continues to mop up liquidity in an effort to combat inflation. Last month headline inflation dropped but interest rate benchmark remained up price to keep foreign portfolio investors glued in the local economy.
Banks demand for government securities have been uptrend amidst rising credit default due to tight economic conditions. Money market accounts return has also been affected following a shift in market dynamics. #Money Market Rates Fall Sharply as Liquidity Pressures Ease FCMB Climbs as Investors Await Audited Results
