Money Market Rates Increase as FX Debits Hit Liquidity
The short-term benchmark interest rates increased as outflows for foreign exchange sales to banks reduced the liquidity level in the financial system. In the Nigerian money market, the Nigerian Interbank Offered Rate (NIBOR) rose across all tenors, reflecting tighter liquidity conditions within the banking system.
Conversely, major money market indicators declined. The open repo rate and overnight lending rate increased by 0.08% and 0.25%, respectively, closing at 26.67% and 27.21%.
Investment firms reported that interbank liquidity tightened despite ₦28.11 billion in FGN Bond coupon inflows. The liquidity strain was driven by Central Bank of Nigeria (CBN) FX settlements.
The banking system opened the week with a strong liquidity balance of ₦290.7 billion, supported by an inflow of ₦28 billion from bond coupon payments.
The Nigerian Interbank Treasury Bills True Yield (NITTY) declined across all tenors, indicating bullish sentiment in the secondary market for Nigerian Treasury Bills. However, increased investor sell-offs drove the average yield up by 0.07%, closing at 21.13%.
“Barring any unforeseen outflow, we expect liquidity to stay in surplus and interbank rates to trend slightly lower from current levels, driven by anticipated inflows from bond coupon payment’, TrustBanc said in a note. NGX Delists Niger Insurance, 2 Others, as Investors Gain N488bn
