Interbank Market Liquidity Keeps Short-Term Rates Steady
The robust liquidity balance in the financial system kept the short-term benchmark interest rates steady despite outflow for net OMO bills settlement. The financial system closed with N1.373 trillion, a decline of N94.10 billion on the day from an opening balance of N1.467 trillion, according to data released by AIICO Capital Limited.
Banks borrowing activity at the Central Bank of Nigeria (CBN) standing lending facility (SLF) window has reduced significant with local lenders taking excess funds to deposit facility instead.
The sufficient liquidity conditions reversed previous trend, staying positive despite CBN efforts in mopping up excess funds. The interbank market retained ample liquidity despite a net OMO settlement of ₦160.40 billion yesterday, holding rates steady at 26.5%, analysts at AIICO Capital Limited said in a note.
Both the Overnight Policy Rate (OPR) and the Overnight (O/N) rate remained unchanged at 26.50% and 26.96%, respectively. “Rates should hold near 26.5% tomorrow, as no major funding pressures are expected despite the NTB settlement of ₦585.25 billion (net debit of ₦260.84 billion)”.
NIBOR declined across all tenors on Wednesday, with the Overnight rate dropping by 2 basis points to 26.99%, and the 1- month, 3-month, and 6-month rates falling by 27, 18, and 18 basis points, respectively.
Cowry Asset Limited said this was due to enhanced system liquidity from OMO bills repayment by the CBN. In contrast, money market rates remained stable, with the Open Repo Rate (OPR) and overnight rate unchanged at 26.50% and 26.96%, respectively.
The Nigerian Interbank Treasury Bills True Yield exhibited mixed performance at midweek. Yields on the 1-month, 3-month, and 12-month tenors increased by 14, 16, and 11 basis points, respectively.
Meanwhile, the 6-month tenor decreased by 7 basis points. The average yield for NT-Bills fell by 23 basis points to 18.61%, reflecting strong and positive investor sentiment in the secondary market, according to Cowry Asset Limited. Nigeria Bonds Yield Falls Amidst Widening Real Interest Rate
