Interbank Rates Increase as Financial System Liquidity Drops
Interbank rates rose significantly on Monday in the money marker as liquidity level in the financial system reduce sharply.
The money market rates had slumped over the past week as FAAC credits, bond coupon and inflows from maturing instrument saturated the financial system.
In the money market, short term rates adjusted down just after the Central Bank of Nigeria announced that the authority has lifted suspension for banks and other authorised dealers to borrow from standing lending facility.
Nigerian interbank offered rate (NIBOR) rose by 0.78% to close at 21.03%, signaling system illiquidity, said Cowry Asset Limited in a note. Analysts noted that 1-month, 3-month, and 6- month NIBOR also fell by 0.88%, 0.88%, and 1.18%, respectively.
Data from the FMDQ Securities Exchange also confirmed that Key money market rates climbed due to pressures on funding level in the financial system.
Data showed that the open repo rate (OPR) increased by 357 basis points to 21.68%, and the overnight lending rate (O/N) rose by 224 bps to 22.30%. Analysts at AIICO Capital Limited said expect interbank rates to stay at similar levels tomorrow, pending any major flows. #Interbank Rates Increase as Financial System Liquidity Drops
