Money Market Rates Surge as CBN Tightens Liquidity
Money market rates rose ahead of Nigerian Treasury bills auction scheduled for Wednesday as activity of the Central Bank of Nigeria (CBN) tightened liquidity in the financial system.
The interbank market remained highly liquid following ₦459 billion in OMO maturity inflows. The liquidity level in the financial system closed stronger, settling at N1.470 trillion on Wednesday. To absorb excess liquidity in the financial system, the CBN offered ₦600 billion in a short-dated OMO auction.
The open market operations attracted ₦1.179 trillion in subscriptions and the allotted OMO bills worth ₦620.65 billion to foreign portfolio investors and local banks who participated at the auction.
Despite the mop-up, interbank rates held at 26.5%. The open repo rate (OPR) and overnight lending rate both rose 7bps to 26.50% and 26.96%, respectively, AIICO Capital Limited said in a note.
NIBOR increased across all maturities, with the Overnight rate rising by 15 basis points to 26.93%, and the 1- month, 3-month, and 6-month rates advancing by 17, 18, and 42 basis points, respectively, driven by heightened liquidity demand among financial institutions.
Conversely, money market rates declined, with the Open Repo Rate (OPR) decreasing by 8 basis points to 26.42% and the Overnight rate falling by 7 basis points to 26.88%.
The Nigerian Interbank Treasury Bills True Yield started the week with varied performance. Yields on the 1-month, 3-month, and 6-month tenors dropped by 18, 21, and 4 basis points, respectively, while the 12-month tenor surged by 63 basis points.
The average yield for Nigerian Treasury Bills decreased by 18 basis points to 18.85%, indicating robust and positive investor sentiment in the secondary market ahead of N480 billion auction today.
Analysts anticipate that the short term benchmark interest rates will hold near 26.5% midweek unless major funding pressures emerge.#Money Market Rates Surge as CBN Tightens Liquidity Zenith Bank Gives Investors 53% Return in 8 Months
