Excess Liquidity in Banking System Hits N4trn, Rates Steady
With about N4 trillion on record, the financial system has been flooded with excess liquidity that keeps the short-term benchmark interest rates movements in check.
The banking liquidity surged to about N4 trillion, supported by additional inflows, including OMO bills repayments after recent statutory disbursement to states.
On Thursday, the banking system closed at N3.975 trillion as the money market recorded about N150 billion in additional credit flow, data provided by AIICO Capital Limited revealed.
“As the market continued to adjust to the moneary policy committee’s asymmetric corridor, the interbank market remained robust, supported by a rise in system liquidity to ₦3.98 trillion on the back of a ₦201.38 billion coupon inflow,” the investment firm said in its latest update.
In the same vein, Cowry Asset Limited said Nigerian interbank rates showed mixed performance, with overnight rates declining 5 bps due to enhanced banking system liquidity.
Market analysts expressed that the improvement stemmed from a ₦855.79 billion increase in Standing Deposit Facility balances, ₦254.9 billion from maturing OMO instruments, and the CBN’s accommodative monetary stance.
However, medium-term rates moved higher, with 1-month, 3-month, and 6-month tenors rising 13 bps, 5 bps, and 8 bps, respectively. Money market funding costs held steady, with both the Open Repo Rate and overnight funding rate unchanged at 24.50% and 24.88%.
The Treasury Bills secondary market exhibited divergent trends through NITTY yields. While 1-month and 6-month yields rose 4bps and 26bps respectively, 3-month and 12-month yields declined 4bps and 5bps.
Despite these mixed movements, the overall Nigerian Treasury Bills average yield remained flat at 18.36%, indicating cautious but stable investor sentiment in the secondary market. #Excess Liquidity in Banking System Hits N4trn, Rates Steady Naira Spot Rate Little Change on Balanced FX Demand, Supply
