Interbank Rates Dip by 10% as FAAC Inflow Boosts Liquidity

Interbank Rates Dip by 10% as FAAC Inflow Boosts Liquidity

Interbank rates fell sharply inflows from the Federal Account Allocation Committee (FAAC), which hit the financial system on Monday. The FAAC credits upturned the tightened funding profile in the money market, thus, dragging rates downward by about 10% apiece.

The huge balance in the space would reduce rates at local banks borrowed either from the apex bank or themselves. The system had opened with more than N1 trillion at the close of business session on Friday, from N704 billion, according to a market report by Futureview Financial Services Limited.

Specifically, the open repo rate decreased by 9.54% to 20.15%, and the overnight rate decreased by 9.17% to 20.80%. The two short term benchmark interest rates had crossed 31% in the recent past week. Last week, liquidity pressure mounted, with rates trending at double digits ahead of inflows from maturing instruments in the debt market.

“We anticipate the interbank rates will remain at similar levels while awaiting the decision at tomorrow’s MPC meeting and the primary market auction debits for the week”, analysts AIICO Capital Limited said.

Investment firm, Cowry Asset Limited, reported that Nigerian interbank rates declined across all tenors, reflecting system liquidity. #Interbank Rates Dip by 10% as FAAC Inflow Boosts Liquidity Ecobank Advises Businesses to take advantage of its Single Market Trade Hub