Repo, Overnight Rates Sink as Huge OMO Inflow Boosts Liquidity
Money market rates—repo and overnight lending rates—sank sharply as liquidity balance in the financial system increased strongly. According to updated data by the Central Bank of Nigeria (CBN), system liquidity surged to N1.015 trillion from about N95 billion deficit on the back of massive inflows totalling N1.110 trillion.
FMDQ platform data highlighted that money market rates trended downward, with the open repo rate (OPR) falling 580 basis points to 26.50% and the overnight rate declining 570 basis points to 27.00%.
The financial system experienced a significant intraday surge in liquidity conditions, supported by an inflow of OMO bill maturities of N854.5 billion. In contrast to market expectations, the Central Bank of Nigeria (CBN) failed to float an open market operation to roll over or refinance matured OMO bills during the week.
Analysts anticipate that the market will be less affected by the Treasury bills settlement, as the authority raised more than the amount that matured this week.
The banking system liquidity will receive additional inflows from the FGN bond coupon inflow of ₦392.74 billion on Thursday. Market analysts said the amount should bolster system liquidity and help sustain current rate levels, assuming no major funding pressures emerge.
The influx of these inflows is expected to slow down deposit money banks’ borrowing activities at the CBN standing lending facility window, keeping rate movement in check.
The Interbank rates (NIBOR) fell across all maturities, Cowry Asset Limited said, with the overnight rate dropping by 2.57% and the 1-month, 3-month, and 6-month rates decreasing by 0.92%, 0.95%, and 0.89%, respectively.
The Nigerian Interbank Treasury Bills True Yield curve rose across all tenors, with yields on the 1-month, 3-month, 6-month, and 12-month maturities increasing by 13 bps, 24 bps, 18 bps, and 20 bps, respectively.
However, the average yield dipped slightly by 3 bps to 18.08%, reflecting heightened investor interest in the secondary market. # Repo, Overnight Rates Sink as Huge OMO Inflow Boosts Liquidity Money Market Rates Mixed as CBN Sterilised N2.3trn
