Money Rates Fall as OMO, SDF Inflows Boost Liquidity to N3.3trn
Money market rates fell in the latest adjustment to improved liquidity in the banking system. The market recorded huge inflows from OMO bill repayments in addition to inflows from the Standing Deposit Facility (SDF), and these lifted system liquidity to about N3.3 trillion.
Specifically, the liquidity level in the financial system surged by more than N1.147 trillion to N3.237 trillion as the Central Bank of Nigeria (CBN) allowed OMO repayment without an immediate auction to replace matured bills.
In a note, AIICO Capital Limited reported that the interbank market opened stronger with improvement in system liquidity following the N855.79 billion increase in SDF and N254.9 billion inflow from OMO maturities.
With robust liquidity registeed in the financial system, the Nigerian Interbank Offered Rate (NIBOR) performance was mixed across different tenors, Cowry Asset Limited said.
Short-term rates showed improvement as overnight rates dropped 14 bps and one-month rates fell 8bps, indicating better liquidity in the banking system following CBN’s dovish stance.
In contrast, six-month rates climbed 25 bps higher, while three-month rates held steady in the absence of significant funding pressures.
The money market rates fell sharply on the day, reflecting better liquidity condition. The Open Repo Rate (OPR) dropped by 100 basis points to 26.50%. Also, the overnight lending rate fell by 103bps to 25.92%, respectively as the MPC cut the MPR by 50bps to 27%.
The interbank rates are expected to continue trading at current level barring any funding pressure, AIICO Capital said.
The Treasury Bills secondary market exhibited similar divergent trends through the Nigerian Interbank Treasury Bills True Yield.
The short- to medium-term yields rose significantly—one-month rates increased 20 bps, three-month rates climbed 30 bps, and six-month rates surged 56 bps, Cowry Asset said in its market update.
However, twelve-month yields moved in the opposite direction, falling 30 bps. Despite the mixed individual tenor performance, the overall Nigerian Treasury Bills average yield declined 5bps to settle at 18.36%, suggesting growing investor confidence and stronger market sentiment in the secondary Treasury Bills market. Banking, Insurance Sectors Drive NGX Index Higher by 29bps
