Excess Liquidity Worth over N2tn Keeps Market Rates in Check
The money market rates tightened below 27% on the back of excess liquidity in the financial system, spurred by inflows from matured OMO, Treasury bills, and Remita inflows.
According to data released by AIICO Capital Limited, the banking system liquidity closed at N2.085 trillion on Friday, up by N446 billion week on week from N1.639 trillion.
The market recorded an inflow of N184.75 billion from Nigerian Treasury bills maturities, and there was an additional inflow of N45.50 billion from expired OMO bills. Remita inflow further lifted liquidity level despite cash reserve ratio (CRR) debits and FX sales settlements.
Analysts said the absence of liquidity management measures by the Central Bank kept system liquidity stronger last week. As a result, the system’s net long position increased to NGN1.95 trillion versus NGN1.47 trillion in the prior week, according to Cordros Capital Limited.
The open repo rate (OPR) was unchanged at 26.50%, while the overnight lending rate eased 4 bps to 26.96%. The T-bills market was largely quiet, with modest activity on select Nigerian Treasury bills and OMO papers, though limited offers capped volumes.
The market anticipates short term rates to increase if the CBN conducts aggressive liquidity absorption through an OMO auction.
CBN to Auction OMO, Treasury Bills
In the new week, the market awaits the CBN to float OMO bills at the primary market auction amidst expiring bills. The total inflows of N378 billion from expiring OMO, and Nigerian Treasury bills to boost liquidity level in the financial system this week.
The CBN has a standing plan to conduct a primary market auction where Nigerian Treasury bills worth N290 billion will be offered to investors for subscription.
In a surprise move, the Apex Bank failed to float OMO bills auction last week despite inflow from expired assets, and this boosted the liquidity level in the financial system.
This week, the market expects N300 billion in OMO bills repayment in addition to inflows of N78 billion from expired treasury papers, Cowry Asset Limited said in a note. #Excess Liquidity Worth over N2tn Keeps Market Rates in Check AXA Mansard Targets N13.19bn Profit in Q4, Investors React

