Excess Liquidity in Banking System Keeps Rates Lower
Excess liquidity level in the banking system has continued to keep short-term benchmark interest rates tight, reflecting the absence of funding shock. Banking system liquidity increased despite the ₦185.9 billion outflow for settlement of Nigeria’s monthly bond auction conducted at the beginning of the week.
According to market data released by AIICO Capital Limited, liquidity conditions increased by ₦155.7 billion to close the day at ₦1.3 trillion, largely driven by a ₦459.0 billion increase in the standing deposit facility.
Interbank rates movements were also mixed, as the Open Repo Rate (OPR) remained unchanged at 26.50%, while the Overnight (O/N) rate edged down by 12 basis points to settle at 26.88%, signaling a slight improvement in system liquidity.
Analysts expect rates to remain moderate, supported by liquidity of about ₦1 trillion that will follow the system barring any significant funding. On Wednesday, the Nigerian Interbank Offered Rate (NIBOR) displayed a mixed trend across all tenors, with the overnight and 1-month benchmarks each rising by 4 basis points, Cowry Asset Limited said in its report.
Meanwhile, the 3-month and 6-month tenors declined by 17 and 25 basis points, respectively—reflecting varied liquidity pressures across the curve. The Nigerian Treasury Bills (NITTY) curve recorded yield declines across most maturities, indicating a shift in investor sentiment as rates trended lower.
However, in the secondary market, average treasury bill yields rose by 14 basis points to 17.76%, driven by sell-side pressure despite the broader downward movement on the curve. #Excess Liquidity in Banking System Keeps Rates LowerNNPCL Has 3 Weeks to Address N210 Trillion in Audit Discrepancies – Senate
