Interbank Rates Dip Over Surplus Liquidity in Banking System
The funding rates dipped further in the money market due to robust liquidity balance in the financial system. The money market opened the week with liquidity surplus following buckets of inflows from various sources last week.
FAAC credit, Remita inflows and FGN coupon payment reduced pressures in the money markets, and activities of banks at the Central Bank of Nigeria’s (CBN) Standing Lending Facility reduced.
The surplus in the banking system evident on Friday extended into the new week, soaring by 90% to open at ₦401.95 billion, TrustBanc Financial Group Limited said in a market update.
the Nigerian Interbank Offered Rate (NIBOR) decreased by 1.08%, 0.75%, 0.55%, and 0.21%, settling at 27.00%, 27.38%, 28.19%, and 28.93%, respectively, due to ample liquidity in the financial system.
Similarly, key money market indicators such as the Open Repo Rate (OPR) and Overnight Lending Rate declined in the absence of an unmet funding demand. Data from the FMDQ confirmed that the open repo rate (OPR) fell by 0.42% to 26.58%, while the overnight lending rate (O/N) decreased by 0.33% to 27.17%.
With the system awaiting the bond auction settlement worth ₦606.46 billion, analysts now expect a significant reduction in liquidity, with expectation that interbank rates would react negatively to the huge outflow. The pressure in expected to reduce as a result of OMO maturities of about ₦335 billion, which analysts think will provide additional liquidity support. Ministry Seeks $2 billion Fibre Optics Funding
