CRR Refund Boosts Liquidity as CBN Holds Auction
Cash reserve refunds by the Central Bank (CBN) to Nigerian lenders boosted funding levels in the financial system, according to reports released by investment firms. Consequently, funding rates decline as deposit money banks play at the CBN standing lending facility reduced significantly.
In April, local lenders borrowed N4 trillion from the apex bank standing lending facility or window to support liquidity requirements; in addition to sustained selloffs on their investment in Nigerian Treasury bills.
Fixed income securities analysts reported the Nigerian Treasury bills’ secondary market traded with a quiet tempo throughout the session yesterday. Overall, the benchmark yield remained relatively unchanged at 7.20% while the 364-day bills yield held firm at 10.38%.
According to several analysts’ views, market players prepare for the midweek Primary Market Auction.
“We believe available liquidity will give room for a downward revision of rates across all maturity”, TrustBanc Capital Limited told investors.
In the near term, fixed income securities analysts said they expect the outcome of the Nigerian Treasury bills auction to shape trading in the secondary market.
Yesterday, liquidity in the financial system was strengthened by about 10%, reaching a closing value of ₦585.69 billion. The funding profile was buoyed by inflows from CRR refunds and RT 200 payments to exporters.
Accordingly, the overnight rate inched lower by 1bps to close at 11.33%, while open repo was unmoved at 11.00%. Until Thursday when the Nigerian Treasury bills auction would be settled, analysts said they expect interbank funding rates to stay depressed at the market floor. # CRR Refund Boosts Liquidity as CBN Holds Auction
