Interbank Rates Diverge as Bonds Inflows Reduce Banking Deficit
The interbank rates or the short-term benchmark interest rates diverge as N600 billion inflows from Federal Government of Nigeria (FGN) bonds maturities and coupon payment reduced total deficit in the banking system.
The Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, indicating improved liquidity in the banking system, though the balance closed negative, Cowry Asset Limited said.
The financial system liquidity saw some improvement but stayed in negative territory, even with inflows from FAAC disbursements, FGN bond maturities ₦562 billion and coupon payments totalling ₦38 billion.
Despite these inflows, the Overnight Policy Rate (OPR) and Overnight Rate (O/N) remained high, closing at 32.42% and 32.83%, respectively, AIICO Capital Limited said in a note. The receipts from local bonds reduced the banking system deficit by 53%, bringing it to ₦923.56 billion at the start of the week from N1.964 trillion.
Consequently, the open repo (OPR) rate inched up by 2 basis points (bps), to close at 32.42%, while the overnight lending rate contracted by 7bps to settle at 32.83%.
This week, liquidity conditions are expected to improve, driven by the anticipated inflows totalling about ₦1.78 trillion from Mar-25 bond maturity, FAAC disbursements and the net impact of NTB issuance, according to TrustBanc Financial Group Limited.
Last week, system liquidity closed negative at -N1.96tnfrom – N956.02 billion in the previous week, reflecting the tight market conditions.
On Friday, the Open Repo Rate (OPR) maintained 32.40% (+0bps), while and the Overnight Rate (O/N) increased higher to 32.90%, (+10bps) from 32.80% in the prior week. #Interbank Rates Diverge as Bonds Inflows Reduce Banking Deficit Naira Lost N19 amidst $231m FX Sales to Banks
