Excess Liquidity in Banking System Keeps Rates Stable

Excess Liquidity in Banking System Keeps Rates Stable

Excess liquidity in the Nigerian banking system kept the short-term benchmark interest rates stable in the money market after a N400 billion cash reserve debit on Friday.

The open repo and overnight lending rates tracked behind 27% apiece in the absence of significant funding pressures.

Banks borrowing from the standing lending facility of the Central Bank also reduced versus previous experience, a development some analysts attributed to the absence of primary market auctions.

At the beginning of the week, the banking system surplus fund opened at N906.85 positive as outflow remained minimal. Consequently, the Open Repo (OPR) rate remained flat at 26.50%, while the overnight rate increased by 9 bps to 26.95%.

Looking ahead, analysts said the inflow from Nigerian Treasury bills net repayment of about ₦127 billion is expected to boost liquidity in the financial system this week. However, the Nigerian Interbank Offered Rate (NIBOR) rose across all tenors.  #Excess Liquidity in Banking System Keeps Rates Stable Impact of U.S. Trade War on Nigeria Likely Limited