Interbank Rates Increase as OMO Auction Saps Liquidity

Interbank Rates Increase as OMO Auction Saps Liquidity

Interbank rates increased as OMO bill auction debits sapped liquidity levels in the financial system. Money market rates adjusted moderately in reaction to the liquidity squeeze, without exerting much pressure on key indicators.

The Nigerian Interbank Offered Rate (NIBOR) declined across all tenors, reflecting liquidity conditions in the banking system, according to investment banking firm Cowry Asset Management Limited.

Meanwhile, key money market indicators showed upward movement, as the Open Repo Rate increased by 0.08% to 26.58%, and the Overnight Lending Rate rose by 0.21% to 27.17%.

The Nigerian Interbank Treasury Bills True Yield (NITTY) curve trended downward across most maturities, resulting in a 10-basis-point decline in the average Treasury bills yield to 20.93%.

The Central Bank maintained its tight monetary policy, offering ₦500 billion in OMO auctions across two long-term tenors on Tuesday. Demand outstripped supply, according to AIICO Capital Limited, with total subscriptions reaching ₦773.74 billion and allotments at ₦756.74 billion.

Analysts said despite the liquidity drain from the auction, the short-term benchmark interest rates held firm at 26.5% due to offsetting inflows from ₦239.15 billion in maturing OMO bills.

Interbank rates are likely to hold steady at 26.5% unless significant liquidity outflows materialize, according to analysts. #Interbank Rates Increase as OMO Auction Saps Liquidity Naira Appreciates as CBN Sells Additional Dollars in FX Market