Interbank Rates Crash despite Outflow for OMO Auction
The interbank rates crash by about 300 basis points, or 3% apiece, as liquidity levels in the financial system remain robust despite outflows for open market operations (OMO bills) sold to investors yesterday.
The OMO bills were offered in three tenors for a total of ₦500 billion, but the Central Bank of Nigeria (CBN) sold ₦758 billion of the long-dated paper market participants at the primary market auction on Tuesday.
Short-term benchmark rates reacted positively to the funding level in the absence of significant pressures in the market. Data from the FMDQ platform showed that funding rates nosedived.
Interbank rates: the open repo rate and overnight rate contracted by 298 bps and 295 bps, respectively, to settle at 22.73% and 23.40%, respectively, as system liquidity remained robust despite OMO auction settlements.
The Overnight Nigerian interbank offered rate (NIBOR) dropped by 458bps to 20.67% on Wednesday, Cowry Asset Limited said in a note on Wednesday.
Analysts said local deposit money banks with excess liquidity sought lower borrowing rates in the money market. #Interbank Rates Crash despite Outflow for OMO Auction Interest Rate on Nigerian Treasury Bill Spikes to 21.45%
