Excess Liquidity Keeps Money Market Rates Steady
Money market rates were unchanged as banking system liquidity remained positive. The liquidity in the banking system declined by 11%, opening the day with a surplus balance of ₦519.11 billion from N582.9 billion.
This reduced funding pressures, which halted banks borrowing sprees from the Central Bank of Nigeria’s (CBN) standing lending facility at a double-digit high rate. In the absence of funding pressures, the short-term benchmark interest rates movement were in check.
Hence, the overnight policy rate (OPR) and the overnight rate (O/N) held steady at 26.42% and 26.83%, respectively, according to AIICO Capital Limited. In its note, Cowry Asset Limited told investors that the Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, indicating improved liquidity conditions in the banking system.
However, key money market indicators remained stable amidst expectation that liquidity will remain positive ahead of the Nigerian Treasury bills auction on Wednesday.
Projecting into the week, Coronation Research revealed expectation that interbank rates would decline as FAAC disbursements, Remita inflows, and OMO maturities boost liquidity. The inflows from these sources are expected to increase funds available for lending and reduce borrowing costs for banks.
As the market gears up for the NTB auction tomorrow, TrustBanc Financial Group Limited expects the system to maintain a positive position while interbank rates continue to trade at current levels. #Excess Liquidity Keeps Money Market Rates Steady Nigerian Exchange Falls by N73bn as Investors Dump VFD, OANDO

