Interbank Rates Increase despite OMO Repayment, CRR Refund
Interbank rates increased sharply due to funding pressures despite inflows from cash reserve maintenance refunds, OMO bill repayments, and other maturing instruments.
On Tuesday, OMO bill repayment worth ₦164.68 billion boosted the liquidity level in the banking system by 67% to ₦797.66 billion, TrustBanc Financial Group revealed in a note.
Also, AIICO Capital Limited told investors in a note that liquidity level in the financial system was boosted by cash reserve refunds. This happened amidst the latest OMO bills auction conducted by the Central Bank of Nigeria (CBN), which dragged the financial system.
Liquidity balance in the financial system has remained uptrend in 2025. The system liquidity in the money market increased from N476 billion to about N798 billion. Local deposit money banks borrowing activities at the CBN standing lending facility has reduced.
Analysts said the liqudity balance in the financial system remain sufficient to meet funding demand from banks. However, analysts said it is not all banks that face liqudity shortfall, some cash rich lenders are also taking advtantage of market conditions to earn higehr rates on the free funds.
Due to strong liquidity, interbank funding rates surged by over 130 bps, settling at 27.90% and 28.60%, respectively. System liquidity opened notably higher due to inflows from CRR refunds and OMO maturities. Inflows worth about N300 billion supported the liquidity level, AIICO Capital Limited said in a note.
Data from the FMDQ platform confirmed that the overnight policy rate (OPR) increased by 1.40% to close at 27.90%, while the overnight rate (O/N) climbed by 1.60% to settle at 28.60%. Hence, the Nigerian Interbank Offered Rate (NIBOR) rose across all maturities, signaling illiquidity in the banking system, Cowry Asset Limited told investors in an emailed note.
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