Interbank Rates Dip as FAAC, Remita Inflows Boost Liquidity
In the money market, the short-term benchmark interest rates dipped significantly on the back of additional inflows, which boosted liquidity balance in the financial system.
Data showed that interbank rates retreated sharply as a flood of inflows lifted liquidity balance from the deficit position that it had sustained for weeks.
Amidst liquidity struggles, banks borrowed a total of N8.3 trillion from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) to fund their operations and close deficits.
Analysts said borrowing activities from the CBN window would reduce drastically as the market anticipates more inflows continue to boost banking system liquidity.
In a note, TrustBanc Financial Group said the banking system ended its 8-day deficit streak, starting the week with a surplus balance of N451.06 billion. There was a remarkable decline of 870% in the use of the Standing Lending Facility by DMBs, dropping from N679.10 billion to N70 billion, the lowest level in nine days.
Market observers said the short-term benchmark interest rates fell below 28% for the first time in a long while. The tight liquidity in the financial markets had kept rates elevated.
The Nigerian Interbank Offered Rate (NIBOR) increased across most maturities, except for the Overnight NIBOR, which decreased by 1.12% to 29.63%, indicating sufficient liquidity in the banking system, said Cowry Asset Limited.
Data from the FMDQ platform confirmed that the overnight policy rate (OPR) decreased by 2.07% to 27.18%, and the overnight rate (O/N) fell by 2.02% to 27.89%.
AIICO Capital Limited said outstanding FAAC disbursements, Remita inflows, and other inflows credited into the market eased the pressures. This includes FGN bond coupon payments worth N10.17 billion. #Interbank Rates Dip as FAAC, Remita Inflows Boost Liquidity DMO Offers 2 Savings Bonds in December
