Interbank Rates Dip as Remita, Signature Bonus Boost Liquidity
Interbank rates were kept in check as signature bonuses, a non-refundable payment made by an oil company to the government in exchange for the rights to develop an oil block commercially, and inflows from OMO bill maturity lifted the balance in the financial system.
Money market rates fell sharply week on week to settle around 20% apiece in the absence of funding pressure in the financial system in the just concluded week.
System liquidity saw a substantial improvement driven by inflows from OMO maturities, Remita inflows, and Signature bonuses, AIICO Capital Limited said in its market update.
According to market analysts, the balance in the financial market was sufficient enough to keep money market rates movement in check despite debits for Central Bank FX auctions settlements and cash reserve ratio maintenance.
This positive trend significantly eased funding rates across banks, with the Overnight Policy Rate dropping by 10.53% to 19.25% and the Overnight Rate decreasing by 10.46% to 19.68% week-on-week.
Nigerian interbank offered rate (NIBOR) increased across all maturities, except for the overnight NIBOR, which declined, indicating improved liquidity in the banking system, Cowry Asset Limited said.
Analysts said they expect rates to stay at their current levels, supported by continued improvements in system liquidity, unless there are significant debits from the Apex bank.
Putting the figure on the market trend, TrustBanc Financial Group said the system liquidity decreased by about 15%, ending the week with a surplus balance of ₦398.31 billion.
The firm dissected that inflows from bond coupon payments amounting to about ₦300 billion, along with OMO repayments totaling ₦254.25 billion, bolstered system liquidity.
Last week, analysts said average daily liquidity rose by 212%, reaching a surplus balance of ₦390.7 billion, compared to previous week’s daily deficit of ₦435.7 billion.
Analysts anticipate that the settlement of the Nigerian Treasury bills auction will reduce available liquidity and drive funding rates slightly higher from current levels in the new week.
