Interbank Rates Ease as Financial System Liquidity Spikes 36%
With a slide in interbank rates, excess liquidity in the financial/banking system increased by about 36% on Wednesday to N7.40 trillion, reflecting the absence of significant funding pressure.
The market anticipates additional inflows of N2.32 trillion from Nigerian OMO maturities, even though the Apex Bank quietly floated an auction at which about N2.8 trillion was mopped up.
The significant amount of healthy funds kept the short-term interest rate benchmark in check, as banks continue to park funds in the Central Bank’s standing deposit facility.
System liquidity rose to ₦7.40 trillion, up by +35.53% on the day, supported by coupon inflows and stronger placements at the standing deposit window, AIICO Capital Limited said in a note.
Analysts reported that there was no recourse to the standing lending facility, reducing pressure on interbank rates on Wednesday.
Money market funding costs diverged slightly, with the Overnight rate easing by 2 basis points to 22.12%, while the Open Repo rate remained unchanged at 22.00%.
In the Treasury Bills secondary market, yields moved in opposite directions: the 1-month and 3-month papers rose by 20bps and 27bps, respectively, while the 6-month and 12-month tenors each dropped by 5bps.
Despite mixed directional moves, heightened trading activity buoyed market sentiment, nudging the average T-Bill yield up 2 bps to 18.87% and preserving a generally bullish tone. OMO Bills Reopening Drives Funds Away from Nigerian Stocks
