Money Market Rates Mixed as CBN Sterilised N2.3trn
Money market rates closed in mixed direction after the Central Bank of Nigeria (CBN) open market operation and Treasury bills auctions drained excess liquidity in the financial system.
The CBN raised about N2.3 trillion across primary market auctions conducted in two consecutive days as part of an effort to tighten excess cash available in the banking system last week.
These market actions tightened funding profile despite significant inflows from maturing Treasury bills and Open Market Operations (OMO) instruments totalling N258 billion and N600 billion, respectively.
While some inflows were completely recapitalised at the primary market auctions, banks borrowing from the CBN was minimal, though the liquidity profile fluctuated on both sides until the week locked down in surplus.
Hence, the overnight lending rate surged, but repo rate steadied at the floor level in the absence of significant inflows from any maturing instruments in the new week.
Last week, the money market experienced mild volatility as funding rates rose early on despite a robust liquidity surplus, supported by the CBN’s Standing Deposit Facility support accessed by the banks.
The liquidity level tightened sharply, swinging to a N1.61 trillion deficit following the N2.13 trillion OMO bills settlement by midweek. However, by the end of the week, system liquidity rebounded to N750.3 billion surplus.
Barring any significant liquidity constraint, analysts said they expect funding rates to remain relatively stable around the current level. The Nigerian Interbank Offered Rate (NIBOR) inched higher across all tenors.
This broad-based uptick signalled intensified pressure on short-term funding, according to Cowry Asset Limited.
The Open Buy Back (OPR) rate remained unchanged at 26.50%, while the Overnight (O/N) rate rose slightly by 10 bps to 27.00%, reinforcing the tight funding conditions. #Money Market Rates Mixed as CBN Sterilised N2.3trn#
