OMO Bills Inflow Fuels Banking System Liquidity, Rates Steady
Inflow from expired OMO bills fuelled liquidity surge in the banking system on Tuesday, and rates were steadied at the current floor level while the market anticipates monetary easing.
The financial system liquidity increased to N2.455 trillion, according to update released by AIICO Capital Limited from N2.111 trillion the previous day.
Banks were noted to be active at the Central Bank of Nigeria (CBN) standing deposit facility, though the rate of fund sterilisation reduced compared to initial experience. TrustBanc Financial Group reported that placements at the standing deposit facility window declined by 10% to ₦1.75 trillion.
On the other hand, commercial banks were absent at the CBN borrowing window, reflecting the absence of funding pressures. The CBN has halted its open market operations, and these additional funds continue to flood the money market.
On Tuesday, the interbank market retained ample liquidity following ₦204.87 billion in OMO maturity inflows, keeping rates stable at 26.5%. Both the overnight repo rate and overnight lending rate held firm at 26.50% and 26.92%, respectively.
Given the current liquidity, analysts said they expect the ₦84.29 billion FGN bond coupon inflow to boost funding profile amidst N290 billion treasury bill auction on Wednesday.
The Nigerian Interbank Borrowing Rate (NIBOR) recorded declines across most tenors, with the overnight rate falling by 2 basis points to 26.86%.
However, money market rates held steady, with the Open Repo Rate (OPR) unchanged at 26.50% and the overnight rate stable at 26.96%.
In contrast, the Nigerian Interbank Treasury Bills True Yield (NITTY) saw declines across all maturities, with yields on the 1-month, 3-month, 6-month, and 12-month tenors dropping by 21, 40, 63, and 37 basis points, respectively.
The average yield for NT-Bills settled at 18.46%, reflecting sustained strong and positive investor sentiment in the secondary market. With no major outflows on the horizon, system liquidity is expected to remain in surplus over the near term. Nigeria’s Gross External Reserves Climb to $41.7bn –CBN Data
