Funding Costs Moderate as Financial System Liquidity Tops N5trn
Money market funding costs moderated as liquidity in the financial system liqudity topped N5 trillion on Monday, according to updates released by investment firms.
Inflows from previous primary repayments maintained system liquidity, analysts said, noting the absence of significant outflows to offset the excess credit balance.
The market experienced a sharp outflow for the settlement of large OMO bill auctions last week, but this did not exert significant pressure on the funding profile.
The Central Bank of Nigeria (CBN) was absent from the market, with no auction floated, as anticipated, to mop up carried-forward excess liquidity on Monday.
As a result, liquidity in the money market edged higher by 3.89% day-on-day to close at N5.05 trillion, up from N4.86 trillion in the previous session.
Deposit Money Banks (DMBs) continued to place funds at the CBN’s Standing Deposit Facility (SDF) window, totalling N4.86 trillion, with no recourse to the Standing Lending Facility.
Market analysts reported that rates declined across all tenors, reflecting improved liquidity in the financial system. The average funding cost fell 33 basis points (bps) to 20.27%.
The Overnight Policy Rate and Overnight rates fell by 40 bps and 26 bps to 20.00% and 20.54%. The Nigerian Overnight Funding Rate (NOFR) remained steady at 20.00%.
Excess Liquidity in Banking System Soars 37% Ahead of OMO Debit
