Excess Liquidity in Banking System Keeps Rates in Check
Interbank rates close steady due to excess liquidity in the banking system. The size of funds available for money market operations remains hefty, and banks are leveraging it, pumping funds into the standing deposit facility of the Central Bank.
The absence of funding pressure kept short-term benchmark interest rates movement in check, lowering banks’ borrowing from the CBN standing lending facility at a higher rate.
At the beginning of the week, the interbank market remained liquid as a ₦259.7 billion FGN bond coupon bolstered the liquidity balance in the financial system, which opened at N1.6 trillion.
Last week, deposit money banks channeled more than N5 trillion to the standing deposit facility of the CBN due to excess funding. But the Nigerian Interbank Offered Rate (NIBOR) showed mixed movements across all tenors.
Meanwhile, money market indicators reflected a muted performance, as both the Open Repo Rate and the Overnight Lending Rate remained unchanged at 26.50% and 26.88%, respectively.
The Nigerian Interbank Treasury Bills True Yield declined across all tenors, while the average yield on Treasury bills fell by 0.04 percentage points to 20.79%.
In the absence of any major outflows, market analysts said they expect the system liquidity to remain healthy while interbank rates trade at current levels. #Excess Liquidity in Banking System Keeps Rates in Check BUA Cement Bolsters Earnings; Profit Rises by 351% in Q1
